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Insurance and Investment in one plan.
A plan that works like a term plan, and Earns like ULIP Plan
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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/492
A guaranteed Savings Plan (GSP), is a non-participating non-linked endowment life insurance plan. ULIP provides the dual benefit of investment and insurance.
Financial planning and safety are critical for almost all of us because we need to be financially strong to handle the different situations for ourselves and our families in every phase of life, ensuring a secure future for our families and us.
However, it might be difficult for many to select the right financial product for themselves, given the limitless availability of financial plans. So, if you are planning to invest and looking for an insurance plan to fit your financial goals and requirements, you may look for Unit Linked Insurance Plans (ULIPs).
Thus, to make it clearer for you, we will discuss the difference between a guaranteed savings plan and ULIP. This will help you understand why ULIPs have become popular and why they may be a better investment option when comparing ULIP and guaranteed plans.
Here is a table based on the important parameters to suggest the difference between guaranteed savings plan and ULIP.
Parameters |
ULIP |
Guaranteed Savings Plan |
Purpose |
Dual benefit of investment and insurance |
Mainly non-participating insurance and guaranteed returns |
Objective |
Investment and insurance with market-linked opportunities |
Guaranteed Savings/returns |
Tax benefit |
Available under Section 80C & 10(10D) |
Available under Section 80C |
Return on investment |
Variable return based on the type of fund invested in and markets’ performance
|
Guaranteed return as the investment in volatile and risky funds is low. |
Charges |
All the charges are transparent and the policyholder is informed beforehand about them |
Managing GSP can be a little expensive. Can include some hidden charges based on the policy terms. |
When should you consider |
To be considered when you require life insurance protection and a good return to stay in sync with market growth.
If you manage ULIP wisely you can get a good long-term return. |
To be opted by those who don’t want to take any risk and need guaranteed return at a stable rate of interest. |
How your money is utilized |
The premium paid is divided into two parts. One goes towards insurance and the other one towards investment in market funds.
|
The premium directly goes towards insurance cover. The policyholder is promised a guaranteed payout. |
SIP |
Yes |
No |
Investment portfolio |
You can manage which funds you want to invest in and switch between them.
You cannot track the exact portfolio until the insurance company reveals its holdings
|
No method of knowing the investment portfolio. The whole fund is managed by the insurance company |
Lock in period |
3 – 5 years depending on policies |
Locked till maturity. Can be discontinued after 3 years without losses and payment based on the premium deposited |
Security |
No security on investment as linked to market products |
Highly secured & Guaranteed return |
Ideal term |
Suggested for long term |
Preferred Long term |
The information mentioned above is enough to tell you all about ULIP vs Guaranteed plan. From what we have seen, ULIPs seem to be a better deal for people who are aiming at long-term wealth generation. Both ULIPs and Guaranteed Plans are good investment tools. The requirement will differ in each.
If you are looking for a long-term investment and balanced or optimized returns, ULIP is tailor-made for you. However, if you know that future holds uncertainties and you need to invest for those unforeseen situations, guaranteed plans can be your savior.
1. Differences Between Term Insurance, ULIPs, and Health Insurance
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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