New Ulips suit passive investors but mutual funds remain a better option

In mutual funds, if you have a systematic investment plan, you can stop it anytime and get back the entire fund value

Insurers are giving unit-linked insurance plans (Ulips) a makeover. In their new avatar, costs have been reduced so much that they can compete with direct mutual funds (MFs). The insured only pays fund management and mortality charges. There is no policy administration charge, policy allocation charge or fund switching fee, all of which eat into returns.

Insurers are launching these competitive products to get a slice of the growing pie of retail investors’ money going into the stock markets. “In the past few years, investment in stock markets via MFs has grown manifold. But, investors’ participation through Ulips has been steady,”