ULIP vs Mutual Fund: Which is the Better Investment Option?

by Tanisha Chabra
04 July 20245 min read
link-whatsapplink-telegramlink-twitterlink-linkdinlink-redditlink-copy
ULIP vs Mutual FundsULIP vs Mutual Funds
link-whatsapplink-telegramlink-twitterlink-linkdinlink-redditlink-copy
audio icon

00:00 / 00:00

prev iconnext icon

Investment plan plays an integral role in turning your financial goals into reality. There are many investment options available that can help you grow your money and fulfill your dreams. ULIP and mutual funds are still some of those investment options. They help you to diversify your risk and earn attractive returns. 

Explore the difference between mutual funds and ULIP plans to choose the right investment option according to your financial goals. 

ULIP vs Mutual Funds – Which is Better?

ULIP and mutual funds are some of the top investment options to help you get financial freedom. Which one is better depends upon your financial goals, risk tolerance capability, and duration of the investment. ULIP offers a combined insurance coverage plan and different investment options, whereas a mutual fund enables you to grow your money by investing in different securities. 

ULIP plans vs mutual funds offer different benefits in terms of profit and risks. After gathering all the information about ULIP vs. mutual funds, choose the relevant option. It will help you create a secure future for yourself and your loved ones. 

What is ULIP?

ULIP (Unit-linked insurance plan) is one of the top investment options today, offering insurance coverage and investment benefits together. ULIP investment includes a combination of insurance and investment plans. It enables you to invest your money in equity and debt or the combined investment of equity and debt. Some ULIP plans offer lucrative benefits such as tax savings, partial withdrawal, and more. 

What are Mutual Funds?

Mutual funds are also a trustable and popular investment plan in today's time. The goal of a mutual fund is to pool money from individuals and different financial institutions to invest in different securities and top mutual funds

There are two ways to invest in mutual funds: SIP and lump sum. People who choose SIPs have to invest in fixed intervals, and people who choose lump sum have to make a one-time investment.

Also Read: Difference Between SIP And Mutual Fund

Difference Between ULIP and Mutual Funds

Go through the detailed comparison between ULIP vs mutual funds listed below to gain deeper insights and make the right investment decisions.

                Features 

                          ULIP 

                Mutual Funds


Definition 

ULIP (Unit-linked insurance plan) is one of the top investment options in today's time that offers insurance coverage and investment benefits together. ULIP investment includes a combination of insurance and investment plans.

Mutual funds are also a trustable and popular investment plan in today's time. The goal of a mutual fund is to pool money from individuals and different financial institutions to invest in different securities.


Goal 

The goal of ULIP is to grow money and generate wealth, along with offering insurance coverage. 

The goal of mutual funds is to offer long-term investment options with stable income. 


Risk 

ULIP includes market risks from low to high intensity because of equity exposure. 

The risk in mutual funds depends upon the type of investment and allocation of funds. 


Mode of Investments 

ULIP requires a lump sum investment or a fixed premium on specific duration or intervals. 

Mutual funds include SIP or lump sum investment modes. 


Flexibility 

ULIP offers the flexibility to switch between many types of funds. 

Mutual funds don't offer flexibility to switch between the same mutual fund plan. 

Let's gain detailed insights into the ULIP plan vs Mutual Funds to understand which is better:

  1. Meaning 

ULIP investment includes a combination of insurance and investment plans. A mutual fund is to pool money from individuals and different financial institutions to invest in other securities.

  1. Goal 

ULIP aims to grow your money and generate wealth while offering insurance coverage. On the other hand, mutual funds seek to offer long-term investment options with stable returns.

  1. Involved Risk 

ULIPs have low to high risk because of equity exposure and insurance risk. Mutual fund risk depends upon the type of investment and the allocation of funds in different portfolios. 

  1. Mode of Investment 

One can invest in ULIP through a lump sum or pay a fixed premium at particular intervals. Mutual fund investment offers two investment modes: SIP and lump sum. You can choose SIP mode to invest in fixed intervals and lump sum mode to make one-time investments.

  1. Flexibility 

ULIPs offer the flexibility to switch among different types of funds, whereas mutual fund investments don't. Investors can't switch between the same mutual fund plan. For those interested in exploring different mutual fund options, you can check out the top mutual fund houses in India for the long term to find the best plans suited for your investment goals.

Also Read: Direct vs Regular Mutual Funds

Conclusion 

ULIP and mutual funds offer many benefits that help you grow your wealth. You choose the best option among ULIP and mutual funds based on your financial goals because both offer different benefits. 

ULIP includes investment benefits with insurance coverage, whereas mutual funds offer long-term investment plans. Consider all the details that you need to know to make the best investment decision that suits your goals.

Want to invest in Mutual Fund?
Want to invest in Mutual Fund?

Open Rupeezy account now. It is 100% free and secure.

Start Investment
background_image_blog