Illustration - TermsPlans+MF vs ULIPs

Here is an illustration highlighting the benefits of opting for a Term Plan + MFs over a ULIP.

In the first table, policy premium for Birla Sun Life Dream Plan (for a person of 25 yrs, insured for 25 yrs period) is 7040. The total charges include administration fee, mortality fee, and other misc fund charges. Fund value is the amt invested in ULIPs after deduction of charges. As we can see from first table, fund charges are usually levied for the first 5 yrs. After 5 yrs charges are almost negligible.

In the second table, we have assumed that we are investing the same amount 7040 (policy premium of Dream Plan) in SBI Life Shield Term Plan and a mutual fund. As is quite evident after seeing both the tables, in first five years the fund value in case of MF+Term plan option is more than that of a ULIP. Hence if u r a short term investor this is one of the better options for you. However if u r are looking at a long term horizon (more than1 10 years) than ULIPs can very much generate you better returns. So choose ur option wisely.

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