Unit Linked Insurance Plans (ULIPs) combine life insurance with market-linked investments. A portion of your premium goes towards life cover, while the rest is invested in equity, debt, or balanced funds of your choice. ULIPs come with a 5-year lock-in period (reduced from 3 years by IRDAI in 2010).

Frequently Asked QuestionsAre ULIPs safe?

ULIPs invest in market-linked funds, so returns are not guaranteed. However, IRDAI regulates them heavily. Your capital is not protected against market downturns, unlike traditional insurance plans.

Can I withdraw from ULIP after 5 years?

Yes, after the 5-year lock-in, you can make partial withdrawals or fully surrender the policy. Partial withdrawals from ULIPs are tax-free under Section 10(10D) if conditions are met.

Which gives better returns: ULIP or SIP?

Historically, direct mutual fund SIPs outperform ULIPs by 2-3% annually due to lower charges. Over 20 years, this difference compounds to 30-40% higher corpus with mutual funds.

ULIP vs Mutual Fund 2025: Which Investment Gives Better Returns?

By Admin • Feb 23, 2026 • 📖 4 min read • ✅ Updated Feb 24, 2026

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Insurance & financial content specialist at PolicyBaazar. Helping Indians make informed insurance decisions with expert analysis and unbiased reviews.

📅 Published: Feb 23, 2026 🔄 Updated: Feb 24, 2026 📖 820 words ⏱️ 4 min read

ULIP vs Mutual Fund 2025: Which Investment Gives Better Returns?

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