ULIP vs term insurance
A Unit Linked Insurance Plan (ULIP) combines a small life cover with a market-linked investment. The pitch: 'insurance plus investment, with tax benefit'. The reality: insurance loadings, fund management fees, mortality charges, and policy admin charges eat 2% to 4% of your money in the early years. The cleaner alternative is to buy a pure term plan and invest the difference in mutual funds. The math almost always favours the split.
₹1 lakh per year for 20 years. A ULIP with ₹10 lakh cover (typical) and ~3% all-in costs grows to roughly ₹40 lakh at 10% gross. Term + Nifty 50 index fund: ₹15,000 buys ₹2 crore of cover (much higher), the remaining ₹85,000 a year in the index fund grows to ~₹54 lakh. More cover. More corpus. Less complexity.
Surrendering a ULIP in year 2 because you realised it is bad. The surrender charges are designed exactly to punish you for this. If you are past year 5 (the lock-in), exit. If not, ride it out and never buy another.
A 60-second lesson on this, with a worked drill, lives inside the Finlo app. Free, forever, on the basics.