Unit Linked Insurance Plans | Mutual Funds | |
Objective | Investment along with life insurance coverage. | Purely investment based, that helps in wealth creation. |
Regulated by | IRDAI (The Insurance Regulatory and Development Authority of India) | SEBI (The Securities Exchange Board of India) |
Returns | Moderate returns over long term as the initial and ongoing charges are applied, which means if you invest Rs 100 in ULIP only Rs 93 get invested, remaining Rs 7 goes towards charges. | Equity mutual fund investments offer high returns over a long term as initial charges are nil. Debt MF investment offers moderate to low returns with medium to no risk involvement. |
Charges | Upfront charges like premium Allocation charge, ongoing charges like policy admin charges, mortality charges and most importantly GST as ULIP is considered as service and not investment. | No other charges applied |
Fund Management Charges | 0.5% to 1.35% depending on the fund but NAV is released after adjusting the FMC | 0.2% to 2.50% depending upon the category but the NAV is released after adjusting these charges. |
Lock-in Period | Minimum 5-year lock-in period | 3-year lock-in period for ELSS funds. No lock-in period for regular MF. |
Tax Benefits | Premiums paid under ULIPs are tax-exempted annually up to Rs. 1,50,000 under Section 80C of the Income Tax Act, 1961. Additionally, the maturity amount is tax-free under sec 10(10D) if the annual premium is less than 2.5 lakh. | Only ELSS funds are exempted from tax up to Rs. 1,50,000 under Section 80C of the Income Tax Act, 1961. |
Systematic Investment Plan Option | Available | Available |
Withdrawal | Partial withdrawal option is available | Option of Systematic withdrawal plan is available in MF. |
Switching & rebalancing Option | Switching & rebalancing between funds is easily available and helps in managing the risk. | Switching or rebalancing option is not available but MF has the option of Systematic Transfer Plan (STP) |
Term Period | Long term | All the options are available short term, medium term, long term |
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