Let me make it clear upfront that I am not from a finance background and nor do I work in financial services sector. My interest in investment options are from an angle of investor alone. I have had many people, agents, friends, relatives included asking me to invest in ULIP’s and saying that they bring the best of two worlds. investment and insurance and it surely sounds tempting until you start questioning the basics of this logic.
A insurance is taken as a risk cover that is to say protect yourself/family from some unexpected event that will burden you/your family financially and an investment is done to multiply your capital and you may chose banks, post office, pension schemes, mutual funds, stocks etc. To make it simple an insurance policy and an investment plan have very well defined and separate objectives.Then come these ULIP’s they are essentially mutual funds that invest in stocks and give you a insurance coverage whats wrong you ask well for starters is this an investment or risk cover? If this is investment why do you have insurance combined with it. and if this is a risk cover why invest in stock market which itself is the most risky option available to cover your risk?
My suggestion is keep it simple. Invest in pure term plan for lower premium or money back policy for insurance as risk cover, invest in a variety of mutual funds for investment and then for long term planning nothing beats PPF and pension plan. Do not get tempted by best of both world offers. Always remember nobody offers anything free. You will have to pay a premium anyhow, why dont you make it separate and have a good life:)