These plans provide returns based on the current marker performance. These plans provide coverage where the money paid by the investor is invested in the stock markets. All ULIPs have different types of fund as per the company to invest into. These plans give financial security and life insurance coverage for the investor. ULIPs give the investor a leverage to make direct market investments. Funds can be invested into equity funds or debt funds or both partially. The value of the debt fund or the equity fund is evaluated as Net Asset Value the criteria. Unit Linked plans have a great response in the investment market.
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These funds are complete Systematic Investment Products i.e. SIP. Different mutual funds have different risk exposures. Mutual funds that are equity oriented invest a major part into equities wherein the balanced funds or hybrid funds invest into equity and debt fund market. The debt funds invest in the bonds and fixed income securities.
The potential returns on ULIPs are lower since the ULIPs fall is a member of low risk products unlike a mutual fund product. Here sum assured as promised by the product is regardless of the return earned by the ULIP plan. Whereas in mutual funds the funds are differently featured as the equity mutual funds to incur better returns than the hybrid returns and the hybrid funds give higher returns than the debt funds.
ULIPs can be used for money withdrawal to get through any financial emergency.
ULIP plans are less prone to risks because these funds are made to provide coverage ULIP plans have a variety of scope to invest its funds and needs to be handled diligently since they are basically insurance products. Whereas the risk associated with equity mutual funds are more than hybrid mutual funds and both are relatively more risky than a debt fund. An investor can invest money after studying the NAV i.e. the Net Asset Value.