With the long-term capital gains tax on equity, the unit linked insurance plans (Ulips) versus mutual fund debate is back. We ask the experts if Ulips are now a better investment than mutual funds.
Shyam Sunder, MD, PeakAlpha Investment Services Pvt. Ltd
“A place for everything, and everything in its place.” Growing up, this was the advice I received when I left things lying around. As the debate Ulips versus mutual funds continues, especially after the LTCG tax on equities, I would paraphrase it: “the right instrument for each need, and only the right instrument.” The different needs here are risk management and wealth creation. Term plans are optimal for risk management, provided premiums are paid regularly.... Ulips provide insurance with flexibility—if one had to skip premiums for any reason, the built-up fund value would bridge the gap.
