ULIP and Mutual Fund Comparison

I recieved couple of emails asking for comparison between ULIP and Mutual Fund.
Here it is..

I will start the comparing in a different way.. my point is "When to choose investing in ULIP??".

In short, ULIP = Insurance + Mutual Fund

1. If you don't need insurance, ULIP is not the best bet
2. If you need insurance and want to invest in mutual fund kind of instruments, ULIP is the BEST bet
3. ULIPs are hybrid products. that means, they have insurance and investment component
4. ULIPs offer insurance at a very cheaper rate than term insurance, as others say, I don't agree to the point that term insurance + mutual fund is better.. I don't agree. you can compare for yourself.
5. In ULIP, you can switch between Equity fund to Debt fund and vice versa without any entry/exit charges but you can't do that in Mutual funds. in MFs, there will be entry/exit charges if you do that
6. You have to invest for atleast 3 years in ULIP, but MFs are not like that
7. ULIPs are eligible for Section 80C tax rebate. MFs are not (except tax saving MFs)
8. ULIPs have lock-in period of 3 years where as MFs are not (except tax saving MFs)
9. Returns on ULIPs are not taxable, but returns on MFs are taxable if you withdraw within 1 year
10. You can invest surplus amount in ULIP with minimal entry load or charge, where as there is nothing like surplus in MFs.. in MFs everything is considered as plain investment with same charge
11. ULIPs may or may not disclose the holding portfolio but mutual funds have to disclose where they are investing
12. ULIPs generally have low expense ratio than MFs
13. ULIPs have additional charges on insurance where as MFs doesn't have any insurance component
14. ULIPs have additional charges called "Allocation charges".

So, choose wisely, invest wisely. Bottom line is,

"If you want some insurance at cheaper price and also want to investment in mutual funds, ULIPs are the best instruments to invest in"