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6 Myths About Investing in ULIPs
Unit Linked Insurance Plans (ULIP) is the investment product that offers savings with insurance. However most people are sceptical about investing in ULIPs because of the misconception and myths associated with the product’s objectives, liquidity, returns, functioning, and pricing.
ULIP Plans
- Plan starting from ₹1,000/month
- Save upto ₹46,800 in Tax under section 80C^
- Zero LTCG Tax¶
- In built life cover
- 4.8++ Rated
- 13.2 Crore Registered Consumer
- 53 Partners Insurance Partners
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- 6 Myths About Investing in ULIPs
List of ULIP Funds ~
Fund Name
AUM
NAV
Returns (in %)
3 Year
5 Year
10 Year
Equity Pension
SBI Life
AUM:11,842 Cr
11,842 Cr
NAV
68.95
1.52%
Returns
12.02%
Opportunities Fund
HDFC Life
AUM:35,377 Cr
35,377 Cr
NAV
70.99
1.51%
Returns
17.79%
Highest Returns
High Growth Fund
Axis Max Life
AUM:12,572 Cr
12,572 Cr
NAV
106.58
2.02%
Returns
24.66%
Highest Returns
Opportunities Fund
ICICI Prudential Life
AUM:3,551 Cr
3,551 Cr
NAV
55.09
1.12%
Returns
14.55%
Highest Returns
Multi Cap Fund
Tata AIA Life
AUM:9,938 Cr
9,938 Cr
NAV
60.37
-1.12%
Returns
18.7%
see more plans
Disclaimer :
˜The insurers/plans mentioned are arranged in order of highest to lowest first year premium (sum of individual single premium and individual non-single premium) offered by Policybazaar’s insurer partners offering life insurance investment plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in
Here, we clear some of myths linked to ULIPS:
MYTH 1: ULIPs are costly.
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Reality: Because of the high premium allocation and fund management charges, many people consider ULIPs as a costly investment instrument. However, this was a thing of the past. Earlier, the charges were as high as 6-10%, but now IRDAI brought down the annual charges to 3% for the first 10 years of holding and 2.25% for more than 10 years of holding. Now low cost ULIPs have charges much lower than before and are affordable to all.
MYTH 2: ULIPs are risky instruments.
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Reality: The reason that the money in ULIPs is only invested in the equity market makes it a risk instrument. However, the intensity of risk associated with ULIPs can be selected on the basis of funds with different objectives. . You can invest in a conservative fund by settling for a debt-oriented fund or opt for an aggressive fund if you are a risk-taker. It also gives you an option for selecting a mix of equity and debt fund known as a balanced fund. Additionally, you have the option of switching funds depending on your risk appetite and need of time.
Risk assessment helps in selecting the best SIP.
MYTH 3: ULIPs are not for investing surplus funds.
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Reality: If not at the beginning, you can, at any time top up the ULIPs when surplus funds are available. The top-up premium can be paid anytime during the tenure of the existing ULIP policy and offers the same tax benefits as regular premiums.
MYTH 4: ULIPs cannot be discontinued.
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Reality: After completion of the lock-in period of 5 years, you can, at any time discontinue investing in ULIPs. In doing so, you will not be required to deposit any type of surrender charges.
MYTH 5: Life cover decreases with market volatility.
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Reality: Many people have the misconception that because ULIPs are linked to equities, the market returns affect the life cover. However, the life cover remains the same and ULIPs either pay the complete life cover or the fund value, whichever is higher, if the investor dies.
Latest ULIP NAVs
| Fund Name | NAV  |
AUM |
5 Yr Returns |
10 Yr Returns | |
|---|---|---|---|---|---|
| SBI Life Balanced Fund | ₹69.6 | ₹21160 Cr | 7.47% | 9.53% | |
| SBI Life Bond Fund | ₹50.09 | ₹16781 Cr | 5.33% | 6.66% | |
| SBI Life Equity Fund | ₹182.15 | ₹81025 Cr | 9.47% | 11.27% | |
| SBI Life Equity Optimiser Fund | ₹50.81 | ₹2622 Cr | 9.98% | 11.11% | |
| SBI Life Growth Fund | ₹88.48 | ₹2913 Cr | 8.78% | 10.87% | |
| SBI Life Money Market Fund | ₹36.7 | ₹444 Cr | 5.76% | 6% | |
| SBI Life Top 300 Fund | ₹53.23 | ₹1981 Cr | 9.5% | 11.93% | |
| SBI Life Pure Fund | ₹24.76 | ₹1150 Cr | 8.83% | - | |
| SBI Life Bond Optimiser Fund | ₹21.91 | ₹3238 Cr | 7.01% | - | |
| SBI Life Balanced Pension | ₹69.99 | ₹805 Cr | 8.09% | 10.4% | |
| SBI Life Bond Pension | ₹44.53 | ₹530 Cr | 5.2% | 6.93% | |
| SBI Life Equity Pension | ₹68.95 | ₹11842 Cr | 10.56% | 12.16% | |
| SBI Life Growth Pension | ₹69.39 | ₹632 Cr | 9.45% | 11.4% | |
| SBI Life Money Market Pension | ₹33.92 | ₹142 Cr | 5.71% | 5.98% | |
| SBI Life Equity Optimiser Pension | ₹54.38 | ₹976 Cr | 9.9% | 11.94% | |
| SBI Life Top 300 Pension | ₹51.89 | ₹710 Cr | 9.61% | 12.04% | |
| SBI Life Midcap Fund | ₹45.06 | ₹55035 Cr | 17.26% | - | |
| SBI Life Corporate Bond Fund | ₹16.32 | ₹1025 Cr | 5.38% | - | |
| SBI Life Equity Elite II | ₹48.05 | ₹12182 Cr | 8.95% | 10.9% | |
| SBI Life Index | ₹43.98 | ₹102 Cr | 9.9% | 11.45% | |
| SBI Life Index Pension | ₹45.91 | ₹27 Cr | 10.02% | 11.49% | |
| SBI Life Discontinued Policy Fund | ₹25.35 | ₹10703 Cr | 5.62% | 6.01% | |
| SBI Life Equity Elite | ₹82 | ₹13 Cr | 11.93% | 13.78% | |
| SBI Life P-E Managed | ₹36.51 | ₹215 Cr | 8.52% | 9.68% | |
| SBI Life Guaranteed Pension GPF070211 | ₹26.37 | ₹2 Cr | 5.05% | 6.5% | |
| SBI Life Bond Pension II | ₹23.23 | ₹29088 Cr | 5.1% | 6.3% | |
| SBI Life Equity Pension II | ₹38.51 | ₹12141 Cr | 9.57% | 11.75% | |
| SBI Life Money Market Pension II | ₹20.72 | ₹1532 Cr | 5.48% | 5.72% | |
| SBI Life Discontinue Pension Fund | ₹21.41 | ₹6775 Cr | 5.63% | - | |
| SBI Life Group Growth Plus Fund | ₹54.55 | ₹3 Cr | 7.72% | - | |
| SBI Life Group Debt Plus Fund | ₹39.63 | ₹113 Cr | 6.09% | - | |
| SBI Life Group Balance Plus Fund | ₹46.94 | ₹11 Cr | 6.97% | - | |
| SBI Life Group Balance Plus Fund II | ₹25.79 | ₹869 Cr | 7% | - | |
| SBI Life Group Debt Plus Fund II | ₹25.72 | ₹281 Cr | 6.2% | - | |
| SBI Life Group Growth Plus Fund II | ₹25.63 | ₹237 Cr | 8.03% | - | |
| SBI Life Group Short Term Plus Fund II | ₹21.35 | ₹19 Cr | 5.81% | - | |
| SBI Life Group Money Market Plus Fund | ₹12.48 | ₹2 Cr | 0.99% | - |
See more plans
MYTH 6: ULIPs do not have health and accident cover
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Reality: Since ULIPs offer insurance cover along with investment, just like any other insurance plan it too has rider options such as Accidental Death Benefit (ADB), Waiver of Premium (WOP), Family Income Benefit, Hospital Cash Benefit (HCB), etc. In case of such extremities or calamities, one can benefit from the partial withdrawals to meet their additional cash requirements.
ULIPs have been in market since long and have been offering good returns. This modern and traditional investment mix offers flexibility of switching funds along with easy withdrawal for your current requirements making it a necessary investment tool in your financial planning. If you do not wish to get into the hassles of individual planning, a ULIP with few riders may be the solution.
You may also like to read : ULIPs Are A Little Tricky But Easy To Make Good Money
Insurers Offering ULIPs
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or
insurance product offered by an insurer.
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˜The insurers/plans mentioned are arranged in order of highest to lowest first year premium (sum of individual single premium and individual non-single premium) offered by Policybazaar’s insurer partners offering life insurance investment plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance
plan.
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
+Returns Since Inception of LIC Growth Fund
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.