ULIP vs Mutual Fund – Which is better to invest?

ULIP’s are attractive but the administrative charges levied by the insurance company are quite often very high during the first few years of the policy. This act as a dampener as the returns are affected due to lower levels of funds available for investment. Whereas, mutual fund’s comparable administrative charges are on the lower side and they invest their entire holdings in equities quite aggressively in favorable times, thus allowing portfolio to appreciate rapidly.

ULIPs are not as liquid as mutual funds. The redemption time takes more time as compared to a mutual fund. Portfolio disclosure is another area where MF scores over ULIPs. The competitiveness pressure in the mutual funds industry leads to higher disclosures and investors know exactly where the money is being invested.

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