ULIP or Term Insurance on Your Mind? Decide for Yourself

Jan 04, 2019 | 9 months ago | Read Time: 3 minutes | By iKnowledge Team

With numerous insurance plans, buying the right plan can be confusing. If you are stuck between ULIP plan and Term insurance policy, use this guide and make a smart choice.

 All about Term Insurance Plans

Term plan comes under the traditional plan bracket. This product is considered risk-free, where returns are provided in case of death of the insured. The coverage of this plan depends on the policy term you choose, for instance, 20 years, 30 years or even 100 years! Aegon Life’s iTerm insurance plan offers a coverage till 100 years of age along with competitive premium rates.

The premium needs to be paid annually, if you fail to pay your premium, then your term life coverage ends. The amount that you pay annually will go in covering an uncertain event: death. For instance, Amar has taken a home loan and his current financial status is excellent but what about in the years to come? To reduce the financial burden on his wife and children, he opts for a term plan.

 A term insurance plan is purely a death benefit plan. The insurance company will pay the sum assured to the nominee, only in the event of the death of the policyholder. How to select a sum assured? As a policyholder, the sum assured should be 10 to 15 times your annual income. Also include loans, debts, if any. This amount will be provided to your loved ones in your absence. If the policyholder outlives the tenure of the term insurance policy, there are no maturity returns.

Are you looking for a tax-saving instrument? Then the premium paid towards a term insurance policy can help give you tax benefits under Section 80C. Lower premiums is another benefit and therefore term policy plan is the cheapest insurance plan in the market. The sum assured at the demise of the insured is higher as compared to the amount paid through premiums. If you add riders to enhance your coverage, you will pay a slightly higher premium. Plus, once you purchase a term insurance plan, your premium is locked for the rest of the tenure. For instance, if you are buying a Rs. 50 lakh coverage at the age of 30 for Rs 386 monthly premium, you will pay the same amount till the maturity period.  This depends on whether you are non-smoker or smoker, and your gender. Smokers will end up paying higher premiums due to the higher death risk involved.

What is ULIP or Unit Linked Insurance Policy?

ULIPs have gained popularity over equity mutual funds due to its combination of insurance and investment. ULIPs are market-linked where your money can be invested in bonds, market funds, equities, debts and more.  Additionally, the new LTCG tax from 1st April gave ULIP an edge over others. As per the new LTCG tax, gains received from balanced and equity funds will be taxed at 10% but income from ULIPs will be tax free.

Aegon Life’s iInvest insurance plan gives you the flexibility to invest your money as per your requirements and risk profile. Fund switching is another benefit of opting for ULIPs. You get the option to transfer or switch your funds. There are no tax implications involved, however, as a policyholder, you can avail only a fixed number of free switches. This number depends from one insurer to another. If you would want to switch investments, you would have to pay a nominal fee.

Why Should You Choose Term Insurance?

Term Insurance policy is risk-free and ensures pure death benefit to your loved ones in your demise. The premium component in a Term Insurance is lower than other insurance plans. For instance, Aegon Life’s, the iTerm insurance plan offers competitive premium to secure your family.

Why Should You Choose ULIP Plan?

ULIP is a go-to plan if you require a life cover and an investment. This plan provides maturity benefit. If you are looking for a long-term investment, opt for ULIP. The invested amount will help you attain your future needs.

The Bottom-Line

If you are planning to build a corpus to attain your goals and future needs, such as planning for your child’s higher education, marriage, travel journeys, retirement, then opt for ULIP. It will help you fulfil them. And if you have a loan to pay off or want to ensure that your family lives a comfortable life in your absence, then a term insurance plan will help to attain it.


II/Dec 2018/4731

Calculate premium for your Term Plan

Here’s how you can introduce your teenager to financial planning
Five Reasons why India is a Hot Destination for Foreign Direct Investments
Date of Birth
Annual Income
Sum Assured
Select Cover Upto Age
Full Name
Email ID
Your Monthly Premium for Aegon Life iTerm Insurance Plan


  • Jan 04, 2019
  • |
  • Read Time: 3 minutes

Section 80C, 80CCC & 80CCD Tax Deductions Explained

  • Jan 04, 2019
  • |
  • Read Time: 3 minutes

Tax Structure in India, Explained