Kotak e-Term Plan
Protect Your family’s financial future with Kotak e-Term Plan.
Kotak Assured Savings Plan
A plan that offer guaranteed returns and financial protection for your family.
Kotak Guaranteed Savings Plan
A plan that offers long term savings and insurance in one premium.
Insurance and investment in one plan with Kotak e-Invest.
Kotak Health Shield
Insurance against medical expenses related to heart, brain, liver and Cancer.
Having a good amount of savings and investments, along with adequate insurance, is always a sound financial plan. Even financial experts recommend the right combination of investments and insurance in your overall portfolio. Today, you have a wide choice of insurance products offered by insurers. The main objective of buying an insurance plan is to provide financial security to yourself and your loved ones. In addition to the traditional policies, you can choose between term plans and unit-linked insurance plans (ULIPs).
Choosing between these two options is often confusing. Here are some basics that may help you make the right decision and help you understand the difference between ULIP and term plan and which is better: ULIP or term insurance? Keep scrolling through to know the details:
Term insurance plans are pure life covers that pay the policy benefits to your beneficiaries in case of an untoward circumstance. The coverage is available for different durations, and you need to pay a renewal premium. If you discontinue paying the premium, the coverage becomes unavailable.
There is no investment component in a term insurance policy. Additionally, most of the term policies do not have any maturity benefits. If you survive the policy duration, you do not receive any returns. The death benefits are payable to your beneficiaries and are eligible for tax benefits. The premium paid on the term plan is also eligible for tax deductions under Section 80C.
Below-mentioned are some of the features of term insurance:
ULIPs combine investments with insurance coverage. A certain component of the premium paid on the ULIP is used to cover mortality charges, while the remaining is invested in different financial instruments to provide returns. The investment component may be parked in various instruments such as debt, equity, and bonds. You may choose how the money is invested in these financial instruments.
Some of the key features of ULIPs include:
Based on those mentioned above, you may consider ULIPs a better product.
The bifurcations in term plans are lesser as the entire premium is used towards mortality charges and administrative costs. On the other hand, a portion of the premium on ULIPs is used towards these costs and the balance is invested, thereby having more bifurcations. Therefore, term plans are more affordable and offer higher coverage at lower premiums. Whereas ULIPs involve higher charges, and the premium is relatively high.
Based on your risk profile and financial goals, you may invest in various financial instruments when choosing ULIP. Moreover, you may switch between funds as per your requirements. Such flexibility is not available in a term plan.
When you purchase a term plan, the premium is fixed for the entire duration of the policy. Therefore, you can avail of a higher coverage for a lower premium when you purchase the policy at a young age. Additionally, you may discontinue the coverage by choosing not to pay the renewal premium during the policy term. In comparison, ULIPs come with a lock-in period of five years, and the money cannot be withdrawn during this time.
Having understood the difference between ULIP and term plan and their features, your decision must be based on your personal requirements. If you want to secure your family’s future, term insurance will be beneficial for you when you are no longer around. The sum assured is comparatively higher with affordable premiums. At the same time, a ULIP helps the policyholders if they wish to invest their money to build a corpus for the future. The life insurance cover provided also helps you protect your family against unforeseen setbacks and secure your future goals. A ULIP is beneficial for those who do not have the time and resources to manage their investments. Good returns are expected when the money is invested for the long term.
Now you have details regarding ULIP vs term insurance, therefore, analyzing your needs carefully will help you decide between these two types of life insurance policies.