Folks, this is the time when all of you are planning to find out the best options for savings and investment as well. But many of you are not aware of what can be the best way of investment. Many to know what are the major differences between ULIPs and ELSS and which investment option offers better tax-saving and return. So, this article will discuss the major difference between both the investment schemes. Once the differences are clear, you will be able to make your decision discerningly.
- TYPE OF FUND
- ULIP- ULIP is the acronym of Unit Linked Insurance Plan. It is basically an insurance plan as the name itself suggests. With the help of this product, you can invest in equity, debt or in both equity and debt funds as well.
- ELSS -Equity Linked Savings Scheme which is more popularly known as ELSS is basically a mutual fund investment scheme. It is run by different mutual fund firms. It gives you the option to invest only in equity funds.
- Proposed By
- ULIP – Insurance companies sold it.
- ELSS- mutual fund companies sold it.
- Lock-in Period
- ULIP- lock-in period for this investment plan is 3 years.
- ELSS – The lock-in period for this is saving scheme is also three years.
- ULIP – charges in case of this investment products are generally very high. The premium charged by companies who are offering this investment product ranges from 30 to 35% in the form of premium.
- ELSS- charges in the case of ELSS fund scheme are much lower than ULIP. You can make an investment at 2 to 2.5% charges only. The charges are also flat in nature and do not change by time.
A-ULIP- apart from investment, this plan must have insurance components in it.
- ELSS- ELSS funds do not need to have an insurance component. All the popular ELSS funds in the market today do not have any insurance component.
- ULIP- when compared to the ELSS scheme the returns in ULIP are very low. You can safely assume that over a period of 10 to 15 years you will get 8 to 9% return for your equity fund.
- ELSS- You are definitely going to get higher returns in elss scheme. They are also dependent on the market functions similar to ULIP but the return you can expect is 12% over a period of 0-15 years.
- Tax Benefits
- ULIP- tax exemption of Rs. 100000 subjected under Sec 80C.
- ELSS- tax exemption up to Rs. 1.5 lakhs subjected under Sec 80C.
So, now you have to decide which one is a better investment plan for you. Many people consider ELSS over ULIP and always in search of the best ELSS scheme. The differences above have also declared ELSS the winner.
Hopefully, this article must have helped you in finally making your investment decision. So, invest wisely!