Difference Between ELSS and ULIP
Basis | ULIP | |
---|---|---|
Investment Objective | Primarily in equities for capital appreciation | Combines investment and insurance components |
Lock-in Period | 3 years | 5 years |
Tax Benefits | Up to ₹1.5 lakh under Section 80C | Tax exemption on maturity sum under Section 10(10D) |
Liquidity | More liquidity with a 3-year lock-in | Longer 5-year lock-in restricts early withdrawals |
Flexibility | No fund-switching flexibility | Allows fund switches based on risk appetite and market conditions |
Expense Ratio | Typically, lower expense ratios | May have higher expense ratios and be potentially less cost-effective |
Life Coverage | Does not offer life insurance coverage | Provides life insurance coverage for financial security |
Market Risk | Subject to market fluctuations and potential losses | Offers potential for higher returns but carries market risk |
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