ULIP vs Term Insurance: Which Option is Right for You?

ULIPS and Term Life Insurance plans have become popular investment options in the Indian market, each designed to fulfil different financial goals. ULIPs are dual-benefit products that combine investment benefits with life insurance coverage, whereas Term Life Insurance provides pure life cover with no investment component.   

To achieve specific financial goals, you must be clear about ULIPS vs. Term Insurance Plans. This blog covers fundamental knowledge about ULIPs and Term Insurance Plans, their differences, and other related topics so you can choose the option that best suits your financial goals and risk tolerance.

Understanding ULIP

Unit Linked Insurance Plan (ULIP) combines dual benefits of market-linked investments and life insurance into one product. It’s designed for individuals who want to secure their family’s future while growing their wealth over time. 

Besides investment benefits, their flexibility, partial withdrawals, fund options, tax benefits, etc., are additional standout features that make it an attractive investment to most. 

Anyone who wants to enjoy market-linked growth, secure insurance coverage, and flexibility should consider including a Unit Linked Insurance Plan (ULIP), like the Shriram Life Wealth Pro Plan (UIN: 128L096V01) in their portfolio. Investment Plans like these are ideal for wealth creation and financial security.   

Understanding Term Insurance

Term Life Insurance provides financial protection to your family members in case of an unfortunate event like your untimely death. Unlike ULIPs, Term Insurance Plans don’t provide survival or maturity benefits.

It is the best insurance plan for anyone whose sole objective is to ensure the family’s financial security even when they’re not around. The most notable features of Term Plans are their comparatively low premiums and high coverage. 

You may explore our Protection Plans like the Shriram Life Smart Protection Plan (UIN: 128N069V05), to secure your family’s financial future for challenging times. If you conduct a premium comparison in the ULIP vs Term Insurance analysis, our Term Insurance will stand out for its incredibly lower premiums and long-term coverage. 

ULIP Vs Term Insurance: A Detailed Comparison

Factors to Consider While Choosing Between ULIP and Term Insurance

Financial Goals

Individuals willing to build wealth while staying insured under life coverage should choose a goal-aligned Unit Linked Insurance Plan (ULIP). However, if your primary objective is to secure your family’s financial future even when you're not around, then Term Life Insurance is a better choice. 

Risk Appetite

ULIPs are market-linked, so their returns fluctuate due to external conditions. Hence, invest in ULIPs if you’re comfortable with market volatility and can bear medium to high risk. 

Those desiring risk-free protection should choose Term Life Insurance as the returns remain fixed, unaffected by external factors. You can additionally invest in our Savings Plans and Child Plans that complement the Term Insurance for optimal returns.   

Investment Horizon

Since ULIPs are market-linked, you generally have to remain invested longer to earn substantial returns. Many ULIPs feature a specific lock-in period, making it a long-term commitment.

Conversely, Term Insurance can have a comparatively lower investment horizon as the return remains fixed throughout the policy period.   

Budget Constraints

People with lower budgets can choose Term Insurance Plans because they provide high coverage at a fraction of the amount typically required in ULIP plans. ULIPs demand higher budgets as a portion of the premium payment gets invested in market-linked instruments, such as bonds, equities, mutual funds, etc. 

Future Financial Needs

Your financial responsibilities may evolve with time, so always factor in potential expenses that may arise in the future, such as unavoidable property repairs, medical expenses, etc., while choosing between ULIP or Term Insurance. 

ULIPs partial withdrawal and market-linked returns may ease your financial burden, whereas Term Insurance will safeguard your family’s lifestyle against loss of income after your untimely death. 

Expert Advice

The entire ULIP vs Term Insurance debate can be confusing, so consult a certified financial expert for personalised guidance. Most experts recommend not mixing investment and protection unless you understand how each may influence your financial goal status. 

Never mistake ULIPs as ‘guaranteed income’ products or ignore their lock-in periods when investing. We encourage individuals to invest early as it may help get slightly lower premiums.

Rohan, a 30-year, salaried individual with a dependent spouse and two children, wanted to secure his family’s financial future with maximum life coverage. Hence, he opted for the Shriram Life Smart Protection Plan (UIN: 128N069V05) for security. 

He additionally invested small amounts in our Shriram Life Golden Jubilee Plan (UIN 128L095V01) to support his wealth creation goals. Such balanced investment helped him achieve multiple goals without overexposing his investments to market volatility and preventing excessive premium burden. 

Conclusion

The whole ‘ULIP vs Term Insurance’ analysis isn’t about which is better but which is right for you. Term Insurance is ideal for creating a financial security net for your family so they can continue living a good life even when you’re not around. ULIPs, on the other hand, are great for providing life coverage while enjoying wealth creation. 

We recommend assessing your needs to make the right choice. At Shriram Life Insurance, we provide both Term Insurance and ULIPs, so you may explore our plans to fulfil your financial goals.