We are a working couple with a 3-year old daughter. Both of us are 32 years old and want to cover ourselves for Rs 25 lakh each. Should we buy an Aviva ULIP that carries a premium of Rs 50,000 each annually for 30 years with death benefit of Rs 25 lakh each, or should we buy a term policy for Rs 25 lakh each and invest the rest in PPF and mutual funds (currently, we invest Rs 1.2 lakh per annum in funds).
Insurance and investments do not mix well together. Moreover with high initial and recurring costs, ULIPs fail to serve the investment need of the individual. So in our view you should consider the second option of buying a term policy and invest the rest via an SIP in mutual funds.