Mutual funds and ULIPs are two different products which serve different purposes. While ULIP is a mix of life insurance and investment offered by life insurance companies, mutual funds are purely an investment vehicle that pools the money of a large group of investors and invests it in stocks, bonds, money market instruments and other types of securities. Both of them have a similarity that both these products have options for investment. Some people get attracted with ULIPs as they get insurance and investment in a single product, but with this two in one thing there are various charges associated with it which might make it unfavorable for a few investors. Whereas mutual funds have potential to give higher returns but at a greater risk, which is not favorable to conservative investors. So it’s better to compare the two products and know which is better. ULIPs Unit-linked insurance plans (ULIPs) are life insurance products, which provide risk cover for the policyholder along with investment options to invest in any number of qualified investments such as stocks, bonds or mutual funds. This plan helps customers to avail the benefits of both insurances, as well as wealth creation over a long term. ULIPs are linked to the capital market and offer flexibility to invest in various financial instruments according to one’s risk appetite, future needs, etc. A part of the premium paid goes towards providing the policyholder insurance cover, and the other is invested in stocks and bonds for wealth appreciation. ULIP offers a variety of fund options to suit the needs of the investor-Equity funds, balanced funds, Cash funds, Income, Fixed Interest and Bond funds. Comparison between ULIPs and Mutual funds
Basis ULIP Mutual Funds
Purpose Insurance cover along with investment benefits. Investment benefits.
Risk Low It depends on the mutual fund scheme chosen. Equity-oriented mutual funds are riskier than the hybrid ones and hybrid mutual funds are riskier than the debt funds.
Objective Long-term plans that offer insurance and investment benefit. Ideal for investment for a short to medium term.
Regulatory body IRDA SEBI
Return on investment The return is low as compared to mutual funds. The return is variable and depends on the scheme chosen. Equity mutual funds give higher returns as compared to debt schemes.
When should you consider Consider ULIP if you want protection and better than nominal returns in long-term plans. Consider Mutual Fund when you want high returns in a long term.
How you money is utilized The premium payment towards ULIP go towards the expenses, insurance cover and equity mutual fund. The payment goes towards the expenses and towards purchase of various securities.
Flexibility There is flexibility in this plan as you can decide what proportion of the amount that you are investing shall be used for insurance cover and what proportion goes towards investment in equity. There is no flexibility as all the money that you are investing will be invested in purchasing the asset class which depends on the type of scheme chosen.
Tax benefit Available under Section 80C. It is EEE for ELSS under Section 80C. Equity mutual funds: Short-term capital gain tax is applicable, but long-term capital gain is exempted. Debt mutual funds: Short and long-term capital gain tax is applicable
Expense The expenses to manage ULIP are high as there is no limit set by IRDA. The expenses to manage mutual funds is low as a certain limit is set by SEBI. The charges are for entry load, annual management charge, and exit load. In most cases, the entry and exit load are waived.
Investment portfolio The investment portfolio is unknown. The portfolio tracking is possible if the insurance company is declaring its holdings. Investment portfolio is declared on a quarterly basis.
Lock in period Minimum 3 – 5 years No lock in period. There is a lock in period of 3 years for ELSS
Switching options Allows you to switch between the funds linked to the plan. You will be able to change the risk return. Switching option is not available. You can only exit from the fund.
Ideal term Long term Short to medium term
Liquidity Not very liquid. More liquid as it is more widely traded in market.
  Conclusion Investors should understand the difference between investment and insurance. Never mix these two important aspects of your financial life. The purpose of insurance is to protect your family in case of any exigencies. The purpose of investment is to build wealth over time. Mutual funds are a great product to earn higher returns and build wealth over time. Investors should stay with mutual funds for longer time to earn higher returns. At the same time, when investors buy ULIP, it is good to continue with it till the maturity. Investors should understand their risk profile and investment period and then decide accordingly. If an investor has low-risk profile and an investment horizon of 3 years, investing in ULIPs or mutual funds with major portion in equity is not a good idea. Similarly, an investor with longer investment horizon and high-risk appetite should go for an equity oriented mutual fund or ULIPs with bigger exposure to equities.


CMT Level 1 Study Material

As a matter of fact you can watch live market trading that helps you to connect with CMT. Join a Technical Analysis Course which works on real time markets by using tools & techniques . That’ll give you behavioural understanding of real time Share market. Understanding the money management by real time trading or investment activity. As we know CMT is an MCQ Exam & ask question on application level. Create short notes of Course Content. Get PPT based Short Notes & note interpretation of tools & Techniques on technical analysis. Short Notes help you out to quick revision at the CMT exam time. CMT Books have very complicated language & course content is not properly aligned as it takes topics from various books of different writers. 

So we have to take individual topics and understand concepts in simple, Concise and Clear manner. Take content from various books or websites like Investopedia or Stock Charts on Each Topic for in-depth understanding. Apply tools & techniques with the help of Technical analysis or trading software’s. Read Books twice as MCQ can be created from a single line. while study mark important topics.