ULIP Plans: Understand Pros and Cons Before Investing to Avoid Losses

• ULIPs combine life insurance with market-linked investment, offering both financial security and potential for higher returns.
• Benefits include tax exemption under Section 80C, tax-free maturity/death benefits, and flexibility to switch between equity, debt, and balanced funds.
• Drawbacks involve market risk, as returns are not guaranteed and can lead to losses during market downturns.
• ULIPs come with various charges (premium allocation, fund management, mortality, administration, switching, surrender) that reduce overall returns.
• They have a 5-year lock-in period, limiting liquidity, and offer lower insurance coverage compared to pure term insurance for the same premium.

Why It Matters: Thoroughly understand ULIPs' market risks, charges, and lock-in period before investing to align with financial goals.