Unit-Linked Insurance Plans (ULIPS)!

After new amendments by IRDAI, Unit-Linked Insurance Plans (ULIPs) have become more popular as they offer the dual benefit of insurance & investment. While investment with an added insurance cover may sound enticing, the fact is that the life cover (death benefit) will be just ten times the annual premium, which will not be adequate. And your funds could get locked in when you might have no wish to do so. Ulips, invest in broad-based categories & they do not allow you to average easily nor rebalance or exit at will means you should avoid small and mid-cap or large-cap exposure through the Ulips route. Besides low-cost Ulips have done away with premium allocation charges (which largely went towards high commission payments), mortality charges can eat into your returns. Ulips come with a five-year lock-in period while mutual funds, except equity-linked saving schemes that carry a three-year lock-in, do not. For insurance needs, it is best to buy term insurance policies to protect your family members financially in your absence. It is best to keep insurance and investment needs separate.