With the plethora of insurance policies available in the market, it can be quite confusing for a normal person to differentiate between various types of insurance plans. From amongst various types of plans, two of the most popular ones are: unit linked insurance plan and whole life insurance. Here we give you a low down between these two types of policies.



Whole life insurance: As the name implies, whole life insurance policy, you are covered for your entire life. This means you get insurance cover as long as you live or till 100, whichever is earlier. Certain whole life insurance policies like Tata AIG's Mahalife Gold allows you to premium for the initial 12 years only, while offering life cover for your entire life. You can also get a certain percentage of sum assured after the initial 5 years. Whole life insurance policies invest mostly in debt instruments to generate returns. You can choose a policy with or without bonus. With bonus policies carry higher premiums. Once the policy expires, you or your family members are eligible to get the sum insured along with bonuses accrued. For bonuses, Max New York's policy is the best. The charges for a whole life insurance policy are not declared.

Unit link insurance plan: Also popularly called as ULIP, unit link insurance plan is the new product offering from insurance companies. A unit link insurance plan has the flexibility of investing its corpus amongst various asset classes viz, debt, equity or a mix of two. This gives you the option of choosing the investment option as per your risk appetite. So if you are young and/or have high risk appetite, go for the growth option that invests predominantly in equities. For a middle-aged person having a moderate risk appetite, balanced option that is a combination of debt and equities is advisable. Those who don't want to take risk, debt option is the best choice. Like a mutual fund, net asset value of a Unit link insurance plan is declared by the insurance company. But the major drawback is that this plan carries very high charges. Also some advisors have misled people by telling them that they have to pay premium only for the first three years.

Whole life insurance or unit link insurance plan: Which is better?: There is no clear cut answer to this question. While both the plans offer tax benefits, is better if you want to enjoy the flexibility of investing across various asset classes or if you want higher returns. On the other hand, are good if you want a life cover for your entire life, without having to pay higher premium as you grow old. They are also good if you require periodic payouts. However it is better to consult a financial advisor before buying any insurance policy, since insurance is a lifetime commitment. This will ensure you are adequately protected and in case of your death, your family is quite well protected.

For all kind of Whole Life Insurance & Unit Link insurance plans needs visit www.bharti-axalife.com