I think I was lucky that I chose a good ULIP (an oxymoron? ) SBI ULIPII. Around the same time I invested in a Tax Saving MF SBI Magnum Tax gain (G). After 4 years, lets see what is the actual absolute profit in both the investments.
I started my ULIP in April 2007 for 30000 annual premium (paid annually). I lie into the tax slab of 30%; rebate is given to me (for whole 30000) monthly at the very start of the financial year. I will use discount rate of 9% (assumed average inflation rate) to discount the time value of money back and forth.
Now I will do the similar calculation for my SIP in SBI Magnux Tax gain.
The difference is clear between the two. It doesn't look a lot since my choice of fund was not good. Had I chosen the HDFC tax saver, the current profit for the ELSS MF would have been much more than Rs 1,25,000
So what is my conclusion today:
Avoid ULIPS as much as you can and invest wisely in an MF which has a good track record.
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