Are You a First Time Life Insurance Buyer? Than You Must know the basics of Life Insurance.

Well, see there are 3 basic kinds of Insurance products available in the market. You have to use your brain and decide that which Insurance product you have to chose and which to avoid. Here are these 3 products.

01) ULIPs (Unit Linked Insurance Products):

ULIPs means Insurance + Investment. ULIPs along with providing you the insurance cover, they also invest in market vehicles such as equity & debt and the return is dependent on underlying chosen vehicles.

ULIPs are worst Financial Products. Remember, Investment + Insurance = Worst Combination. ULIPs are nothing but the opaque mutual funds. Rather than going for ULIPs, you should invest in Mutual Funds separately and Insurance separately.

02) Traditional Bonus based Plans:

These Invest as per IRDA guidelines and give you a debt kind of return.

03) Term Life Insurance:

This is a plain vanilla plan. This gives you a higher Insurance coverage with low cost premium.

My Advise to you is to go for a Term Life Insurance + Equity Diversified Mutual Funds for better returns. Term Life Insurance will provide you the life protection while Equity Mutual Fund will give you the best returns in the long run. It is advisable to invest in mutual funds rather than ULIPs for Capital growth because there is no entry load in mutual funds and the management fees of mutual funds is very low. While ULIPs charge you anywhere from 12-18% as an Entry Load + Fund Management Fees.