ULIP Vs. Fixed Deposit: Which is Better and Why?

One of the attractive options is ULIP. Hence, investors have started comparing ULIP VS Fixed Deposits. Let us look at how ULIPs compare to FDs and find out is ULIP better than FDs.

What is ULIP?

ULIP is a life insurance plan that provides a maturity benefit as well. Part of the premiums you pay is invested in your chosen equity or debt fund. The maturity amount includes the returns earned on this investment. But Is a ULIP better than FD?

Yes. A ULIP provides more features and better versatility as compared to FDs. We give you a few reasons why ULIP is better than fixed Deposit-

1. Life insurance

   The ULIP Vs. Fixed deposits can be better understood based on life insurance. The most prominent advantage of ULIP over FD is that they offer Life insurance. A ULIP provides a death benefit to your loved ones in case of your demise. In this way, you can ensure that your dependents are cared for even in your absence. Thus, you get the dual advantage of life insurance in addition to the chance of earning good returns via a ULIP.

2. Flexibility

   Flexibility shows how UILP is better than FD. ULIPs are very flexible. You can switch between debt and equity instruments to take advantage of the market conditions. Therefore, you stand a chance of earning better returns with ULIPs. However, FDs operate at a fixed rate of interest, and hence the returns will mostly be the same.

3. Tax saving

   Tax saving is another reason that people started comparing ULIP Vs. Fixed Deposit. The interest income that you earn on fixed deposits is taxable. However, ULIPs can help you save on taxes. The premiums that you pay toward ULIP are eligible for a tax deduction. The maturity amount of a ULIP is also tax-exempt. As a result, ULIPs are an excellent tax-saving instrument.

   Is ULIP better than FD? Yes, ULIPs are a better place to invest than Fixed Deposits. Apart from ensuring that your money is safe and providing you with life cover, they also give you a chance to earn by investing your money. This versatility is what makes them one of the best avenues to put your money in. When purchasing a ULIP plan, make sure to go through all the features and read the terms and conditions in the policy document thoroughly. 

Fixed Deposit VS ULIP

Let us discuss Fixed Deposit Vs. ULIP to further determine if ULIP is better than FD?

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