Every insurance product that you purchase comes with both advantages and disadvantages. Although the process can be a bit confusing, if you sit down and assess both, chances are you will be able to understand which one is more suitable for you. Understanding your needs and what the insurance entails will help you understand your options and philosophies that are based on understanding. Products that are straightforward, simple, and understanding also continue to draw comparisons with a lot more complex and contemporary instruments like ULIPs. So, if you are wondering whether you should purchase a ULIP or a regularhealth insurance plan, make sure to read this post. We have enlisted the differences between both the products that will help you understand better.
What is a term insurance plan?
Just like the name suggests, a term insurance plan is one that provides you with coverage only for a particular period of time. You get the chance to choose your terms. They could be anywhere between 5 years to your entire life. Since they are all plain plans, the premium is quite affordable. Apart from this, it is highly important that there may be no payout that could outlive your policy.
What does ULIP mean?
Unit Linked Insurance Plans provide you with extensive coverage on any investment avenues. Anyone who has the premium will be used like mortality charges in order to offer your insurance, whereas the second part will be invested in other investment options like equities, funds, or bonds. Whenever it is time to receive the payout on the plan’s maturity, you should get assured sums or even the value of funds that is linked with the investments.
Affordability
Speaking of affordable, regular health insurance plans happen to be available at the lowest costs. A ULIP comparatively has many changes associated with it, so the premiums have to be highly considered compared to that of term insurance.
Financial Security
In regular health insurance plans, any sum assured will be given to your nominees in case something happens to you. In the case of ULIPs, the sum assured will also be provided to nominees. Alongside, the money that you invest could also be used to yield depending on the market conditions and also fulfills the financial goals.
Tax Benefits
With regular health insurance plans, the premiums are usually exempt from taxes. Under section 10, the death benefit you receive from any beneficiaries is also exempt from taxes. All the payouts that you receive are also exempt from this section. Apart from that, you may also be entitled to any tax rebate for the premiums that are paid under 80C.
Health insurance plans are a risk-free way of securing the future of your loved ones just in case something happens to them. This is actually quite useful if you want something that gives you a high sum assured with a very low premium. Alongside, ULIP also offers you great opportunities along with life coverage. Unlike term insurance policies, you can also enjoy maturity benefits that will fulfill your goals, thanks to the investment returns.