Let us look at it this way. A person takes a ULIP when he is 25-30 years of age. What are the probabilities that death will happen in the first 10 years??? Barring accidents, I would say this scenario is very minimal. Considering the high pressure jobs we have and the unhealthy lifestyle we carry on, the body would have taken its toll by the time one gets into the forties. This also the time when the kids are getting into their teens and responsibility is highest.
So consider this scenario. If this person has taken a ULIP when he is 25-30, in the first three years he has completed his requirment of paying the premium. After this period of three years are over, he can then shift the ENTIRE premium that was being paid under the ULIP to either the MFs or eqyuities. And to top it all, he need not worry about paying the insurance premium every year and live under the constant fear that if the premium is not paid, the policy would get lapsed!!!
Again, in the case of ULIP, higher the value of your investment, lower the premium charges which is not the case with term plan. Here the premium remains constant thruout the period of insurance cover.
I agree, insurance is only a risk mitigating tool and should not be used for wealth creation. But when there is an opportunity to have the best of both the worlds, why not????
