A Fixed deposit is the preferred saving option of many as it provides a higher rate of interest than a savings account. However, on December 7, 2022, when the Monetary Policy Committee (MPC) declared to increase the repo rate by 35 basis points to 6.25%, the interest rates of FD in all the banks in India took a hit. As a result, people are looking for alternatives to FDs that provide similar or better returns.
Read moreTop performing plans with High Returns**
Invest ₹10K/month & Get ₹1 Crore# on Maturity
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.
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-
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.
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.
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.
Let us discuss Fixed Deposit Vs. ULIP to further determine if ULIP is better than FD?
FD | ULIP |
You can avail of tax exemption only on the investment amount; the returns are taxable | You can avail of tax deductions on premiums, as well as the maturity amount |
FD interest rates can go down on account of inflation | ULIP, especially, debt related ULIP is likely to fetch more returns as bond rates go up |
FDs offer no life cover | ULIPs, in addition to saving your money and fetching you returns on your investment, also provide life insurance |
FDs are not flexible. Once you invest your money, it has to stay in the same place for the term of the FD or till you decide to withdraw. | You can easily change your fund allocations from equity to debt and vice versa according to the market conditions. |
You earn a fixed interest on FDs | The returns vary according to the market conditions |
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance
plan.
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
+Returns Since Inception of LIC Growth Fund
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
Grow your wealth & meet your Financial goals
Systematically Invest in high growth plans with returns upto 18%*05 Dec 2024
The ABSLI Salaried Suraksha ULIP is a unit-linked05 Dec 2024
The Bajaj Allianz Life Assured Wealth Goal Plan is a life14 Nov 2024
When investing in Unit-Linked Insurance Plans (ULIPs), it’s11 Nov 2024
A top-up premium in a ULIP (Unit Linked Insurance Plan) allowsInsurance
Calculators
Policybazaar Insurance Brokers Private Limited CIN: U74999HR2014PTC053454 Registered Office - Plot No.119, Sector - 44, Gurugram - 122001, Haryana Tel no. : 0124-4218302 Email ID: enquiry@policybazaar.com
Policybazaar is registered as a Composite Broker | Registration No. 742, Registration Code No. IRDA/ DB 797/ 19, Valid till 09/06/2027, License category- Composite Broker
Visitors are hereby informed that their information submitted on the website may be shared with insurers.Product information is authentic and solely based on the information received from the insurers.
© Copyright 2008-2024 policybazaar.com. All Rights Reserved.