Investment in Unit Linked Insurance Plans in India

But, then Mutual Funds cannot cater for the (I) Insurance needs. (ii) The Mutual Funds can be liquidated
whenever the customer thinks the returns look enough (except those Mutual Funds with a Lock In
period of 3 to 5 years and have an IT exemption. But, then 5 years is not a much longer period.) and thus
reducing the capital base in an irregular form of risk. The point here is even though the Mutual Funds
give very good returns in a long term, the investments have to be made (by the Fund Manager) keeping
in the view the liquidity required for a shorter period.
Ulip policy addresses both the Insurance and Investment needs efficiently. Currently, in India, once you
take a policy, you can surrender or liquidate or partially withdraw only after the completion of 5 years.
They provide insurance and invest into Mutual Funds for considerably larger periods and hence have
unbeatable larger capitals in the market. The large capital enables highly efficient and highly qualified
Fund management due to negligible transaction costs as compared to the capital.
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