Tell the difference between Mutual Funds and ULIP Policies?
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01-21-2013, 09:58 PM
Post: #1
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Tell the difference between Mutual Funds and ULIP Policies?
What is difference between the Mutual Fund Investment and ULIP Policy investment (without
risk coverage)? Is there any major difference in investing in the above two plans. Ads |
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01-21-2013, 10:06 PM
Post: #2
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Mutual funds are more flexible.
The lock in period is very less compared to ULIPs. ULIPs are less transparent than MFs. You know more about how, why, where your investments are made. One of the best advantage of ULIP is the ability to switch between funds which is not available in MFs. It will still be far better to go with MFs, since if you find them not performing well enough, you have the option to redeem and invest in other scheme. You get locked in ULIP. http://www.investingmantra.com Ads |
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01-21-2013, 10:06 PM
Post: #3
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Dear,
MF is better than ULIP MF no front end charges now But you have to pay commission for ULIP Then no coverage for MF But ULIP have many coverages. Check before invest. |
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01-21-2013, 10:06 PM
Post: #4
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Conceptually, in terms of the structure of the product, there is very little difference between a Mutual Fund Scheme and ULIP schemes without risk coverage. Both these are market linked for returns, carries the market risk and in both these options investor get returns based on the performance of the stocks selected and invested by the fund manager who manages the MF scheme or the ULIP scheme.
The similarities end there, i.e. the structure of the product. The way the products are managed and more importantly regulated varies significantly. MF are regulated by SEBI while ULIPs are regulated by IRDA. As an Industry, MF looks at low cost, better performance as its USP, while Insurance looks at distribution reach as their USP. Mutual Funds are generally sold by 'agents who distribute various AMCs products' while Insurance is sold by Agents who are tied to one single Insurance Company (except insurance brokers who are far less in number when compared to tied agents). This is a major factor to be considered as a tied agent tends to understand and position only the products of his principal insurance company, while a un tied agent of Mutual Fund is expected to be performance oriented in terms of choosing a fund when his fees is dependent in todays context on the satisfaction of the investor. The transparency requirements of a Mutual Fund is far more stringent than the ULIPs. Daily NAV, Portfolio Disclosure etc which are followed in the MF industry is far higher thus providing necessary information to the investor. Typically, the cost investing in MF is far lesser than that of a general ULIP scheme The liquidity available in MF scheme (other than close ended schemes) is not available in the ULIP scheme The ULIP scheme, comes with a commitment to save and pay the premium in the future years, which can make a person 'committed' which is not the case with MF, where it is in the investors wish to save and invest further. In nutshell these are the key differences between ULIP and MF. -- Fundu Vishy - Your 'Mutual' Friend Follow me on twitter @funduvishy I blog @ http://blog.powermf.com |
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