Choosing Between ULIPs and Other Market Related Investment Avenues


hen it comes to investment options in India, investors are spoilt for choice. There are numerous investment options available in the market today, each with its own pros and cons. Over recent years, Unit Linked Insurance Plans (ULIPs) have emerged as one of the most promising markets linked investment cum insurance products in India. The availability of other similarlong term investment options such as mutual fund, Equity Linked Savings Scheme (ELSS) and Public Provident Fund (PPF) often leave investors confused. By the end of this article, you will be able to choose between ULIPs are other market-related investments as per your needs:

What is ULIP?

ULIPs or Unit Linked Insurance Plans are investment products that also offers the benefits of a life insurance cover. A part of the premium paid toward a ULIP plan is invested in equity or debt funds depending on your financial needs and risk appetite, while the rest of the corpus is utilized towards providing a life cover. It is a long term investment with a lock-in period of 5 years.

ULIPs Vs Mutual Funds

Both Mutual Funds and ULIPs are similar in the sense that they are long term market-linked investments. ULIPs offers the benefits of life insurance along with market-linked returns while mutual funds are a pure market linked investments. Moreover, ULIPs fall under the EEE tax category, which means that they are completely exempted from taxation. On the other hand, mutual fund returns are liable for taxation under the LTCG tax at 10 per cent for gains above Rs 1 lakh a year.Hence, ULIP’s are best suited for individuals who are looking for tax benefits with a long term financial plan of wealth creation and insurance. On the other hand, mutual funds are best for those who are purely looking at investing.


Equity Linked Saving Schemes or ELSS are pure investment instruments which invest in the equity markets. ELSS offers tax benefits as it is exempted from tax under section 80C.ELSS invests purely in equities or equity-related products and hence, the returns are highly volatile. Hence,ELSS is suitable forinvestors who have a high-risk appetite. Conversely, ULIP investments invest in both equity and debt securities and are professionally managed, hence they carry lesser risks than ELSS. If you have a low-risk appetite, investing in ULIPs is a prudent option.


The PPF is a government introduced savings scheme which is one of the most stable and preferred saving instruments among Indian investors.The rate of interest is decided by the government itself on an annual basis and the existing rate for FY 2018-19 stands at 8%.Investment in a PPF is generally for creating a big corpus over the long run. Thus, making it suitable for long term investors looking for a tax-free maturity amount. On the other hand, ULIPs are suitable for long term investors who are who are looking for tax benefits with a long term wealth creation and insurance.

As you can see, ULIPs have a lot of advantages over other types of market-linked investments. If you are planning to invest in ULIP, it is advisable that you choose Finserv Markets as your partner due as they offer one of the best ULIP plans in the market.