Difference between the Linked and Non-linked Insurance plans

In today’s world, there are many risks associated with human life, and having a good insurance policy is essential for everyone. It is also true that it is impossible to put a monetary value on life every time. For the sake and safety of those people whom you love, and those who depend on you because of your needs, you should invest in an insurance policy.

There are different types of insurance plans available in the market, so choosing the right one is tricky. It is crucial to select the perfect insurance plans that meet your requirements. This article tells you the parameters that illustrate the difference between linked and non-linked insurance plans. 

Linked Vs. Non-linked Insurance plans

Here is the significant difference between the linked and the non-linked insurance plans. Let us dive into the different aspects. 

1.Flexibility in investment

Linked insurance plans (ULIP plans) provide flexibility in the investment terms. You have the chance to invest your funds that best fits your risk appetite, financial goals, and investment horizon. On the other hand, non-linked insurance plans do not permit you to choose your investment on your end. 

2.Maturity benefits

In the linked insurance plans, the units you purchased at the time of the ULIP plan buy are given to you at the maturity of the market value. And the non-linked insurance plans are the pre-defined plan of your sum assured along with the guaranteed returns at the time of purchase of the policy. 

3.Transparency

Investments made in the linked insurance plans are more transparent as compared to the non-linked insurance plans. The choice of your assets is according to your preference and can determine the portfolio regularly. However, the non-linked insurance plans have no component of investment and have no clarity on the amount of money that is invested. 

4.Partial withdrawals

Linked insurance plans such as ULIP plans provide the withdrawal option to you to withdraw the funds partially. This is the best option in the case of emergencies. You can start the money when any emergency needs come. Inversely, non-linked insurance plans have no chance of partial withdrawal. 

5.Switching choice

Linked insurance plans give the option to switch the funds according to the preference over time. If you invest your money in equity-based funds and shift to low-risk funds, you can do it easily with the ULIP plan. But if you are going with the non-linked insurance plans, then this option is not given to you. 

Conclusion

The choice between the linked and the non-linked insurance plans are based on individual preference. If you are liked to face the risk, then you should pitch with the non-linked insurance plans. 

On the other hand, if you afford to take the risk and want high returns on the investment, then you should pitch with the linked insurance plans. ULIP plans also act like the wealth plan policy because they ensure to give security for your loved ones.