You are on page 1of 4

How To Choose A Product?

The selection of the type of insurance product

greatly depends on the risk taking ability of the
investor. This ability is ascertained through a
number of factors, which include the following:
Age and number of dependents in the family.
Investment value
Type of investor.

Comparison between
ULIPS and Traditional plans

Traditional Plans

Definitio A ULIP is a market linked product

that combines the best of
insurance and investment. Though
risk cover is promised, returns
solely depends on the market
ULIP is investment oriented

Traditional plan is
insurance cum
investment plan that
promises both risk cover
and returns to the
Traditional Plan is
insurance oriented


The investment is made into a

flexible choice of funds between
debt, equity or hybrids

A major fraction invested

in debt instruments


Flexibility in switching between

funds (usually free or involves
nominal charges)
Premium and Sum Assured can be
decided by the investor

Only one type of fund is

involved and that too is at
the discretion of the
insurance company
Premium to Sum Assured


Traditional Plans

Risk Factor

designed for slightly more

aggressive investors who able
to handle the turbulence of the
High risk, high returns products

designed for those who

want returns but without
riding the highs and lows
of market
Risk free but at the same
time return free


Investor can track his

investment portfolio to assess
the daily performance of his

The investors premium

flows into a common fund
which is usually not
disclosed to him


Sum assured has to be

delivered to the investor;
however the returns solely
depends on the market

Being a no risk
investment, no
substantial returns can be
expected from Traditional


The money can be withdrawn

from your fund but only after
the lock in period which can be
anywhere between 3 to 5

Traditional Plan involves

locking in your funds.
Funds cant be touched
before death or maturity

After understanding ULIPs and traditional plans it is
important to understand the criteria for choosing
between a traditional insurance plan and a ULIP.
The choice requires considerable analysis, and largely
depends on the profile and goal of the investor.
The investors risk taking ability, which includes her
age, income or return expectation is a crucial factor in
determining the right choice for him.
For instance, a young investor may be more
aggressive and opt for ULIPs, whereas an older person
within the same income bracket may choose an
endowment policy for stability.