What is the difference between unit-linked insurance plan and a mutual fund?
Rohit Sharma, Noida
Unit linked investment plan (ULIP) and mutual fund are two different forms of investments. ULIPs are insurance cum investment products which provide a mix of both insurance and investment in one single policy whereas mutual funds are pure investment products. In unit linked insurance plans, the emphasis is on insurance as well as investment. Most of such schemes provide that in the event of the life assured not being able to pay the agreed premium on time, the insurance will still continue till such time there is adequate balance in the units account to pay for the cost of insurance.
Moreover, both these investments are market linked, which means they are both subject to market risk which means if the performance of the financial market will improve the value of the funds of the investor will also go up and vice versa.