This website including the ‘[EduFund]’ platform is owned, operated and maintained by Helena Edtech Private Limited, a company incorporated under the laws of India. The platform and the services thereunder are provided on an "as is" basis. Use of the service and the platform is at your own risk. Company makes no warranty that the use of the service and the platform will be continuous, uninterrupted, bug-free, error-free, virus-free, free of defects, free of technical problems, nor that it will meet all of your needs. To the extent permitted by applicable law, Company expressly disclaims all other warranties, conditions, results, guarantees, or representations with respect to the service and the platform, whether express or implied, including, but not limited to, the implied warranties of merchantability, merchantable or satisfactory quality, fitness for a particular purpose, non-infringement of third party rights, or arising from the course of performance, course of dealing, or usage of trade.
Investment in securities market are subject to market risks, read all the related documents carefully before investing. The valuation of securities may increase or decrease depending on the factors affecting the securities market.
EduFund and the EduFund App are the brand and product of Helena Edtech Private Limited
“An affiliate of the Company, i.e. Samyama Advisors Private Limited, is registered with the Securities and Exchange Board of India (SEBI) as an investment adviser under the SEBI (Investment Advisers) Regulations, 2013 bearing the registration number [INA000015321]. Samyama Advisors Private Limited may provide investment advice to the clients through the Company's platform.”
Registered Address: 30, Omkar House, Near Swastik Char Rasta, Navrangpura, Ahmedabad Gujarat, India – 380009
Transaction Platform Partner : BSE Star MF (with Member code-51573). CIN No: U67100GJ2020PTC112589. RIA Number: INA000015321 GST No: 24AAFCH2122L1ZU
Please scan QR code to download the EduFund app
Difference between ULIP vs mutual funds. All you need to know
In the previous article, we discussed the difference between debt funds vs hybrid funds. In this article, we will look at the difference between ULIP vs mutual funds.
ULIP (Unit-linked Insurance Plan) is an instrument offering a combination of investment and insurance. It includes an asset and a life insurance cover under one plan.
ULIPs bring forth the opportunity to create wealth and the security of a life cover. The working ULIP is as follows: a part of the premium goes towards life coverage, and the rest of the money is invested into different market products like stocks and bonds.
A mutual fund is a financial trust that collects funds from investors and invests them into different instruments like stocks, bonds and other money market instruments.
Fund managers manage mutual funds and make investment decisions on behalf of the people who have trusted them with their money.
There are different types of mutual funds, such as equity mutual funds, debt mutual funds, and hybrid mutual funds. depending upon the investment proportion in debt and equity.
These different types of mutual funds vary in their risk and return potential. Mutual funds are one of the most popular investment options today.
Differences between ULIP vs. mutual funds
Scope of investment
The main difference is that a mutual fund is merely an investment option, but ULIP provides insurance benefits. It works as a single premium for both investment and life coverage purposes.
Return on investment
The ULIPs offer lower returns than mutual funds – this is because the ULIP promises a fixed sum of money (involving life insurance benefits). On the other hand, mutual funds provide relatively higher returns because they are also dependent on the risk factor of the market.
Tax benefits
Mutual funds offer tax deduction only under investments in the Equity-linked savings scheme; investments in any other mutual fund scheme do not offer any tax deduction.
The redemptions are also subject to taxation under different brackets for equity debt funds. Investments in ULIPs can get a deduction under section 80C of the income tax act 1961. The available deductions are to the tune of Rs 1.5 lakhs.
Lock-in period
Since ULIPs are insurance-based products, their lock-in period is predefined, and the invested money cannot be withdrawn before the end of the period. The timestamp for ULIPs generally ranges from 3 to 5 years.
On the other hand, mutual funds generally have a lock-in period of one year, but in some cases, like ELSS products, the lock-in period is three years.
Expenses
Mutual funds can charge an expense ratio to the upper cap of 1.05%, as set by India’s Securities and Exchange Board. However, with ULIPs, there are no caps. ULIPs fees can vary to higher levels than mutual funds.
Risk coverage
Being an insurance-based product, ULIP offers risk coverage by assuring a sum of money to the family in the event of the plan holder’s death. However, mutual funds do not provide any such facility.
Ideally, you should purchase mutual funds if you have a short- to medium-term time horizon with considerable liquidity and an average risk-taking capacity.
Transparency
Transparency is an essential factor to consider before evaluating which instrument to buy. ULIPs are complex investment products. Thus, they have a lesser transparent structure regarding the expenses and the asset allocation.
Mutual funds are better because you can get a detailed report of the investments made on your behalf.
Finally, your ultimate decision to invest in mutual funds or ULIPs rests with you. Before deciding, you must analyze your financial goals, risk profile, investment tenure etc.
Consult an expert advisor to get the right plan for you