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In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Kotak e-Invest
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Ref. No. KLI/22-23/E-BB/492
ULIP and Life Insurance plans are insurance policies with their own set of financial benefits. Read more to know about the difference between Life Insurance and ULIP.
When it comes to safeguarding your loved ones’ future, you seek out the best option possible. For the same, debating the differences between the best best investment plans is a constant, such as - ‘what is the difference between the ULIP plan and life insurance?’ In this article, we’ll look at both tools in depth to help you make the best decision that’s both financially sound and is aligned with your needs.
A ULIP, or unit linked insurance plan, is a financial instrument that combines insurance with investing. The balance of the ULIP payment is allocated to funds of your choice after the mortality cost or insurance is deducted. The purpose of ULIPs is to assist you in accumulating money and assets. They are market-dependent as the market conditions define their results.
If you’re looking for a long-term investment, ULIPs are the way to go. Since ULIPs’ primary focus is on the investing component, it ultimately leads to wealth creation.
In the event of your death, the sum assured is paid to your beneficiary. Furthermore, the money you have invested will receive returns dependent on market circumstances, thereby assisting you in achieving long-term financial objectives.
As there is no limit specified by the IRDAI, the costs of managing ULIPs are significant. Expenses encompass life insurance mortality fees, premium allocation costs, fund management fees, and administrative costs.
ULIPs include a variety of investment alternatives, such as exchange trade funds, loans, and stock options, amongst others. You can choose any of them depending on your risk tolerance and other financial considerations. You can even switch from one fund to another to maximize your earnings
Section 10D of the Income Tax Act of 1961 provides tax exemptions on the payments earned. In addition, ULIP insurance premiums as per section 80C are eligible for tax deductions.
Risk coverage, a set income earning, safety, and tax advantages are all features of life insurance policies. These are the most traditional types of schemes for individuals with a risk aversion tendency they are very popular for the purpose they serve, such as providing financial protection during emergencies.
A life insurance policy is available to help your loved ones in the form of consistent income payouts or a lump sum payment. Some policies even refund all premiums paid if you live till the end of the policy term.
The sum assured by the insurance provider will be given to the specified beneficiary in the case of your unfortunate demise.
This depends on the type of plan you choose and include costs like life insurance mortality fees, premium allocation costs, etc.
Life Insurance Plans have a different kind of flexibility in the sense that you can choose your cover amount, premium amount, policy term period, etc.
Life insurance payments up to ₹1.5 lakh per year are tax-free as per Section 80C of the Income Tax Act. Furthermore, the death benefit paid to beneficiaries is tax-free under Section 10 (10D).
To summarize, when you compare ULIP plans to life insurance, the former allows you to build wealth while also safeguarding your loved ones in difficult times, and the latter ensures your family’s well-being after you pass away. As a result, it is suggested that you select the option that best matches your personal and financial needs.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Kotak e-Invest
Features
Ref. No. KLI/22-23/E-BB/521
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
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