Term Insurance vs ULIP: Which is Right for You?

When it comes to life insurance, most people in India ask the same question:

“Which is better: Term Insurance or ULIP?”

If you’re also confused, you’re not alone. In this article, we’ll explain what each option really means, the pros and cons, and help you decide which one suits your financial goals.

📌 What is Term Insurance?

Term Insurance is a pure protection plan.

You pay a fixed premium every year.
If something unfortunate happens during the policy term, your family gets the full sum assured.
If you survive the term, there is no payout.

✅ Main benefit:
High coverage at a very low cost.
For example, a 30-year-old healthy person can get ₹1 crore cover for less than ₹1,000 per month.

📌 What is a ULIP?

ULIP (Unit Linked Insurance Plan) is a mix of insurance + investment.

Part of your premium goes towards life cover.
The rest is invested in equity, debt, or balanced funds.

At the end of the policy term, you get the market-linked returns plus life cover in case of death.

⚖️ Term Insurance vs ULIP: Key Differences

Feature	Term Insurance	ULIP
Purpose	Pure risk cover	Insurance + Investment
Cost	Very low premium	Higher premium
Returns	None	Market-linked (can go up or down)
Transparency	Simple	Complex charges (allocation, mortality, etc)
Best suited for	Those who want to protect family cheaply	Those willing to take investment risk

✅ Why Term Insurance is usually better

Many people buy ULIPs thinking they’re getting “insurance + returns.”
But here’s what most people don’t realise:

✔️ ULIPs have high charges, especially in the first 5 years.
✔️ The actual insurance cover is often much lower than a standalone term plan.
✔️ Returns are market-dependent and can disappoint.

If your goal is to protect your family’s lifestyle, Term Insurance is usually better.
For investments, you can separately choose Mutual Funds, SIPs, or other instruments.

❓ Which should you choose?

If you need high coverage at low cost → Choose Term Insurance.
If you’re ready for market risk, long lock-in, and want combined product → ULIP may be considered, but only after understanding the charges and suitability.

📞 Need help deciding?

At Ridhi FinServ, we help clients choose the right Term Insurance, Health Insurance, and create a holistic plan.
👉 Click here to book a free consultation – let’s secure your family’s future together.

❓ Frequently Asked Questions (FAQ)

Q: Is ULIP better than term insurance?
ULIP may suit long-term investors who accept risk; term insurance is better if your main goal is pure protection.

Q: Can I get tax benefits?
Yes! Premiums of both ULIP and term insurance qualify under Section 80C.

Q: What are ULIP charges?
Premium allocation, mortality, fund management, and more. These reduce actual returns.

Q: What’s the best term plan in India?
It depends on age, health, sum assured & features. A licensed advisor can help you compare.

Ridhi Finserv