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ULIPs v/s SIPs – Which is Better

Dec 05, 2017 | 3 years ago | Read Time: 3 minutes | By iKnowledge Team

Sachin Tendulkar or Rahul Dravid? Action movie or romantic movie? These are some of the most common dilemmas, we all face every day. But as an investor the big question that plagues us is Unit Linked Plans or Systematic Investment Plans – which one is better? The simple answer is ULIPs. Want to know why? Read our guide to understand why you should go for ULIPs over SIPs anytime:

What are SIPs?

A systematic investment plan (SIP) helps you invest a specific amount of money in mutual funds at regular intervals of time. This could be on a monthly, quarterly or yearly basis. In other words, SIPs are a planned approach to help you earn a large corpus of wealth over a long period of time.

What are ULIPs?

A Unit Linked Insurance Plan (ULIP) is quite unique because it offers the twin benefits of insurance and investment in a single package. A ULIP plan gives you an insurance policy and also the opportunity to invest in various investment options such as stocks and bonds. This gives you the opportunity to earn market-linked returns while you simultaneously take care of your protection needs.

Investing in ULIPs is a great way to inculcate investment discipline in addition to long-term wealth creation. Aegon Life’s iMaximize and iInvest – ULIP plans help you meet your financial goals, while enjoying good returns.

Battle royale: ULIPs vs SIPs

After you take your monthly expenditure into account, it is possible that you only have a limited amount of money to invest for the future. So, where you put that money is extremely important. You need to find the best possible avenue to invest and reap high returns. Worry not, we will give you a list of factors to show why ULIPs are a better option than SIPs.

Dual benefits

The fundamental difference between ULIPs and SIPs is that only ULIPs offers life cover. Mutual fund SIPs do not offer this facility. So, when you invest in a ULIP, a portion of the money goes into an investment pool just like mutual funds. The insurance company gathers the money from all investors and invests it in various avenues in order to generate high returns. The remaining portion of the premium is put into a life cover.

Less risky

The fact that mutual funds are pure investment products makes them a riskier alternative. This is because the portfolio is exposed to a greater degree of risk in order to generate high returns. ULIPs, on the other hand, are primarily insurance products. As a result, the fund managers try and avoid high risk strategies that could negatively impact your invested capital.

Lower fund management charges

At 2.5% or more, the fund management charges for mutual funds are quite high. In addition, there are a bunch of other charges such as entry load, exit load and recurring charges. In contrast, the fund management charges for ULIPs are much lower at around 1.35%.

Better tax-saving features

Equity Linked Saving Scheme (ELSS) is the only mutual fund that offers tax-saving opportunities. But in case of ULIPs, any amount (up to Rs 1.5 lakh) can save taxes under Section 80C of the Income Tax Act.  


All in all, when the advantages are weighed, the scales tip favourably in the direction of ULIPs. So, if you want to invest for the long-term where you can earn good returns, enjoy tax benefits and a life cover, ULIPs are the way to go.

To know about AegonLife’s life insurance products like term insurance plans and other products like health insurance , visit our home page.


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