What Are the Differences Between ULIP and Endowment Plans?

What Is ULIP?

What Is an Endowment Plan?

Differences Between ULIPs & Endowment Plans

Here are some major differences between ULIP and an endowment plan:

Criteria

ULIP

Endowment Plan

Capital Growth

In ULIP, you get a life cover along with opportunities of growing your capital.

In an Endowment plan, you get the life cover like ULIP, but it does not let you grow your capital.

Maturity Benefit

ULIP gives you an aggregate amount of your investment after the end of its maturity period.

You will get a predetermined lump sum maturity benefit in the endowment plan.

Traceability

You can track how the insurance company invests your money. Furthermore, you can check your investment portfolio.

There is no option to track how your insurance company leverages your premium.

Fund Switch

You can switch your investment instrument from debt to equity fund or vice versa as you prefer.

Since you do not know where your insurer invests your premium, you will need an investment portfolio to switch funds.

Risk

It is open to risk because a part of your premium will stay invested in stocks and bonds.

An endowment plan is free from this market risk because you will get a fixed amount as a maturity benefit.

Partial Withdrawal

You can break your investment to a certain limit after the lock-in period. This facility will allow you to tackle your financial emergencies effectively.

Endowment insurance plans come with many restrictions on withdrawing money before the maturity.

Both ULIP and endowment plans let policyholders get a life cover and thereby protect their families against financial hardships in case of premature death. Both these also come with maturity benefits. However, you must consider the differences between ULIP and an endowment plan, especially in terms of maturity benefits.

The maturity benefit is volatile in the case of ULIP as a part of your premium stays invested in the stock market and bonds. You can purchase an endowment plan if you intend to avoid this market volatility and build your post-retirement fund.

FAQs About ULIP VS Endowment Plan:

Can I add riders with the endowment plan and ULIP? up-arrow

Yes, you can add riders like critical illness benefits, accidental death benefits, accidental disability benefits, hospital cash cover, etc., on top of your ULIP and endowment insurance plan. These will help you broaden the overall health insurance coverage but at an extra premium.

Which documents do I need to submit to buy the endowment plan and ULIP? up-arrow

Here are the different documents that you need to submit while purchasing these health insurance policies:

  • Age proof: Aadhaar card, voter ID card, PAN card, etc.
  • Residential proof: PAN card, Aadhaar card, utility bills, etc.

What is the maturity benefit of ULIP? up-arrow

As a maturity benefit of ULIP, you get whichever of the following is the higher amount:

  • The aggregated value of the investment
  • Sum assured amount
  • 105% of the accumulated premium amount

Is ULIP better than other types of insurance plans? up-arrow

You can purchase a ULIP instead of other insurance plans if you need a higher maturity amount. This is because a part of your premium stays investable stock market, bonds, securities, etc.