Are you confused between ULIP vs Mutual fund? Then I would request you to read and know about ULIP plans first. Both investment products has their own positives and negative as per investors need. When ULIP will provide a life cover with market linked return, Mutual funds are popular for good long term return without any life cover.

You can easily start a SIP in mutual fund and concentrate only in investment and look for term plan for insurance need. But if you need moderate return with insurance combined and at the same time you want to enjoy the taste of stock market, then ULIP plans might suite your investment need.

Also Read What is Linked and Non-Linked Insurance Plan

Difference between ULIP & Mutual Fund?

Here I am sharing a comparison between ULIP VS Mutual Fund in a tabular format highlighting all key points. Hope your will find useful and thing will be clear after reading all these points.

ULIP Plans Mutual Fund
ULIP is a combination if insurance + investment Mutual fund is a pure investment product
In ULIP, you will get life cover as well But, in mutual Fund there is no life cover
All ULIP plan investment can be exempted under section 80C as per income tax rules in India Only ELSS or Equity Linked Mutual Fund investment are eligible for income tax exemption benefit
In ULIP, you can switch between funds to make your investment work better for you In case of mutual fund, it is not at all possible. You have to exit completely from the fund and subscribe a new one in case you find the fund is not performing well
In most of the new ULIP plans, switching of funds are free of cost and it is allowed unlimited times in a year In case of mutual fund, every transaction you do E.g. buy & Sale will attract charges
It is not easy to exit from ULIP plan. That means ULIPs are liquid. But in case of mutual fund, you can exit anytime considering more than 1 year as without cost. In case of ELSS plans, there is a lock of 3 years.
Ulip has around 6 types of charges which is very high in first 5 years of policy. In case of mutual fund only entry load, exit load and fund management charges are applicable
The final amount at maturity is tax free under section 10(10D). Thus the income is tax free for self as well as the nominee. Long term/ short term capital gain taxes are applicable.
Comparatively ULIPs are less risky Equity mutual funds are highly risky
The return from ULIP plans in long run will be moderate compared to Mutual funds In case of mutual fund, Equity oriented mutual funds give higher returns than the hybrid ones. Hybrid mutual funds offer better returns than debt funds.

Should I Invest in ULIP or Mutual Fund?

I hope this comparison chart will make things clear for you and now you can decide whether to choose ULIP or Mutual Fund. Although I have mentioned which is the best investment product tag, that doesn’t mean that they are best investment product. I am trying to decide which is best among these 2 products. And I will say, it is completely depending up on your risk-profile of investment and how well you can manage your funds in long run. If you just want to invest regularly without bothering about market, then I would say Mutual fund could be the best.

Also Read What is Sukanya Samriddhi Yojna

In case you have still any further doubt, then please write a comment below sharing your experience or question. I will try my level best to provide your the best answer.


  1. Excellent information. I would prefer Mutual Funds because Investor can invest regularly in ELSS scheme with the help of SIP option to gain from value averaging benefit

    • You are correct. Mutual funds with SIP is the best way to start investing and gradually building wealth for long term. And one can also save income tax investing in ELSS mutual funds.

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