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Switching Options in ULIPs
Unit Linked Insurance Plans (ULIPs) are financial products offering dual benefits of insurance and investment. Apart from being transparent, ULIPs offer various options to safeguard your returns from market volatility. Fund switching is one such option that allows you to modify your fund portfolio per financial goals. Read on to learn about this feature.
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List of ULIP Funds ~
Fund Name
AUM
NAV
Returns (in %)
3 Year
5 Year
10 Year
Midcap Fund
SBI Life
AUM:67,697 Cr
67,697 Cr
NAV
51.53
-0.60%
Returns
15.97%
Opportunities Fund
HDFC Life
AUM:35,621 Cr
35,621 Cr
NAV
80.64
-1.08%
Returns
12.3%
High Growth Fund
Axis Max Life
AUM:16,228 Cr
16,228 Cr
NAV
126.6
-1.87%
Returns
19%
Opportunities Fund
ICICI Prudential Life
AUM:3,711 Cr
3,711 Cr
NAV
60.52
-0.47%
Returns
12.09%
Highest Returns
Multi Cap Fund
Tata AIA Life
AUM:12,199 Cr
12,199 Cr
NAV
68.76
-0.71%
Returns
14.11%
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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
What are ULIPs and How Do They Work?
ULIP stands for Unit Linked Insurance Plan. They are financial products that combine the dual benefits of life insurance coverage with investment options. Here is how ULIPs work:
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You pay a premium amount periodically (monthly, quarterly, etc.).
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This premium is divided into two parts:
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One part goes towards life insurance coverage, providing financial security for your family in case of your death.
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The remaining portion is invested in chosen funds, like equity, debt or hybrid funds.
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What is Fund Switch in ULIP? How Does It Work?
Fund switching in ULIP is a feature provided by the insurance company that allows you to adjust your investment strategy within the plan by moving your money between different investment funds. Here's how it works:
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Fund Options: ULIPs offer multiple fund choices, like equity funds (higher risk, potentially higher returns), debt funds (stable, lower returns), and balanced funds (mix of equity and debt).
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Switching Mechanism: You can choose to partially or fully transfer your units from one fund to another. This allows you to:
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React to Market Movements: If a fund you invested in is underperforming, you can switch to a better-performing fund.
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Manage Risk: As your financial goals or risk tolerance changes, you can adjust your investment by switching towards less risky funds (like debt) closer to maturity.
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It is important to remember that many ULIPs offer a certain number of free fund switches. Exceeding this limit might incur a fund-switching fee. Consult a registered financial advisor to develop an investment strategy aligned with your risk tolerance and financial goals.
When to Switch Funds in ULIPs?
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Market Movements: If a chosen fund consistently underperforms compared to its benchmark or the broader market, consider switching to a better-performing fund within your ULIP.
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Risk Tolerance Change: As your life stage or financial goals evolve, your risk tolerance might change. If you're nearing a goal and require stability, switch to a more debt-oriented fund. Similarly, for long-term goals and a higher risk appetite, increase your equity allocation.
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Approaching Maturity: Nearing your ULIP's maturity, prioritize capital protection. Consider gradually shifting your investment towards debt funds to minimize risk.
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Consult a Financial Advisor: While fund switching offers control, navigating asset allocation and market timing can be challenging. Consult a registered financial advisor for personalized guidance based on your risk profile and goals.
For example: Mr. Ram Prakash, a 26-year-old individual, has invested Rs 1 lakh in an all-equity ULIP fund for 15 years. Initially, Mr. Ram can maintain 100% of his investment in equities. But once he settles down and has a family, investment in an all-equity fund might be risky for him. He can, perhaps, move 15% of his investment to debt in order to safeguard his money.
What are the Benefits of Switching Funds in ULIPs?
Below are the benefits of ULIP fund switch:
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Manage Risk: Adjust your investment towards less volatile funds (like debt) as you near your financial goals or if your risk tolerance changes, because Risk tolerance defines the best SIP investment strategy when markets fluctuate over time.
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React to Market Movements: If a chosen fund underperforms, switch to a better-performing one to improve returns.
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Modify According to Your Goals: Align your investment with your risk appetite and financial goals. For example, invest more in equity funds for long-term, high-growth goals if you have a higher risk tolerance.
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Greater Control: Provides more control over your investment within the ULIP plan compared to fixed allocation options.
Latest ULIP NAVs
| Fund Name | NAV  |
AUM |
5 Yr Returns |
10 Yr Returns | |
|---|---|---|---|---|---|
| SBI Life Balanced Fund | ₹72.09 | ₹19726 Cr | 5.81% | 8.67% | |
| SBI Life Bond Fund | ₹51.53 | ₹15328 Cr | 5.24% | 6.21% | |
| SBI Life Equity Fund | ₹192.07 | ₹81746 Cr | 7.6% | 10.53% | |
| SBI Life Equity Optimiser Fund | ₹53.94 | ₹2606 Cr | 7.41% | 10.27% | |
| SBI Life Growth Fund | ₹92.76 | ₹2837 Cr | 6.49% | 9.93% | |
| SBI Life Money Market Fund | ₹37.74 | ₹482 Cr | 6.03% | 5.89% | |
| SBI Life Top 300 Fund | ₹54.93 | ₹1972 Cr | 6.48% | 10.78% | |
| SBI Life Pure Fund | ₹28.09 | ₹1251 Cr | 6.89% | 9.93% | |
| SBI Life Bond Optimiser Fund | ₹22.66 | ₹3214 Cr | 6.29% | - | |
| SBI Life Bluechip Fund | ₹9.74 | ₹3671 Cr | - | - | |
| SBI Life Midcap Fund | ₹51.53 | ₹67697 Cr | 14.56% | 16.3% | |
| SBI Life Corporate Bond Fund | ₹16.75 | ₹1009 Cr | 5.17% | - | |
| SBI Life Balanced Pension | ₹72.54 | ₹867 Cr | 6.28% | 9.54% | |
| SBI Life Equity Optimiser Pension | ₹58.33 | ₹1105 Cr | 7.75% | 11.15% | |
| SBI Life Equity Elite II | ₹50.6 | ₹11844 Cr | 6.58% | 9.9% | |
| SBI Life Index | ₹45.01 | ₹87 Cr | 6.25% | 10.16% | |
| SBI Life Index Pension | ₹47.01 | ₹24 Cr | 6.31% | 10.22% | |
| SBI Life Top 300 Pension | ₹54.34 | ₹772 Cr | 6.78% | 11.07% | |
| SBI Life Discontinued Policy Fund | ₹25.99 | ₹10931 Cr | 5.6% | 5.85% | |
| SBI Life Bond Pension | ₹45.81 | ₹552 Cr | 5.2% | 6.45% | |
| SBI Life Equity Elite | ₹85.06 | ₹12 Cr | 8.59% | 12.62% | |
| SBI Life Equity Pension | ₹73.98 | ₹13758 Cr | 7.63% | 11.23% | |
| SBI Life Growth Pension | ₹73.35 | ₹692 Cr | 7.23% | 10.52% | |
| SBI Life Money Market Pension | ₹34.87 | ₹160 Cr | 5.98% | 5.87% | |
| SBI Life P-E Managed | ₹38.43 | ₹195 Cr | 7.22% | 8.87% | |
| SBI Life Guaranteed Pension GPF070211 | ₹27.01 | ₹1 Cr | 5% | 5.86% | |
| SBI Life Bond Pension II | ₹23.85 | ₹28119 Cr | 4.99% | 5.8% | |
| SBI Life Equity Pension II | ₹40.29 | ₹11378 Cr | 6.31% | 10.45% | |
| SBI Life Money Market Pension II | ₹21.28 | ₹1488 Cr | 5.75% | 5.62% | |
| SBI Life Discontinue Pension Fund | ₹21.96 | ₹6203 Cr | 5.63% | - | |
| SBI Life Group Growth Plus Fund | ₹57.06 | ₹3 Cr | 6.42% | - | |
| SBI Life Group Debt Plus Fund | ₹40.99 | ₹115 Cr | 5.79% | - | |
| SBI Life Group Balance Plus Fund | ₹48.55 | ₹11 Cr | 6.08% | - | |
| SBI Life Group Balance Plus Fund II | ₹27.43 | ₹1273 Cr | 6.71% | - | |
| SBI Life Group Debt Plus Fund II | ₹26.68 | ₹363 Cr | 5.88% | - | |
| SBI Life Group Growth Plus Fund II | ₹26.88 | ₹291 Cr | 6.8% | - | |
| SBI Life Group Short Term Plus Fund II | ₹22.03 | ₹24 Cr | 5.98% | - | |
| SBI Life Group Money Market Plus Fund | ₹14.16 | ₹2 Cr | 3.32% | - | |
| SBI Life Group Balanced Pension Fund | ₹10.24 | ₹194 Cr | - | - |
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Charges Levied on Switching Funds in ULIP Plans
ULIP charges for switching funds can vary depending on the specific plan and insurer, but here's a breakdown of what to expect:
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Free Switches: Most ULIPs offer a certain number of free fund switches initially, ranging from 4 to 6 switches per year. This allows you to adjust your investment strategy without incurring additional costs.
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Switching Fees: If you exceed the free switch limit, a fee per switch might be applied. These fees can range from ₹50 to ₹500.
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Conclusion
Fund switching empowers you to take an active role in managing your ULIP investment. By understanding the different fund options, benefits, and associated charges, you can modify your investment strategy within the plan. Consulting a financial advisor can be beneficial in creating a personalized investment strategy that leverages fund switching effectively. With a strategic approach, you can unlock the full potential of your ULIP and achieve your financial goals.
FAQs
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What is a ULIP fund switch?
A ULIP fund switch allows you to move your existing investment within your ULIP policy from one fund to another. This lets you adjust your risk profile by allocating your money between equity (higher risk, potentially higher return) and debt funds (lower risk, lower return). -
Can we switch funds in ULIP?
Yes, you can switch funds in your ICICI Prudential ULIP, but only if your policy includes the Fixed Portfolio Strategy. This feature allows you to manage your investment by switching between equity and debt funds offered by the ULIP. -
What does it mean to switch funds?
Fund switching is the process of moving your existing investment within your ULIP from one fund to another. For example, you can switch from an equity fund (higher risk, potentially higher return) to a debt fund (lower risk, lower return) or vice versa. -
Why should I switch funds in my ULIP?
There are several reasons to switch funds:-
Change in risk tolerance: As your life goals or risk tolerance changes, you may want to adjust your investment allocation.
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Market conditions: If you anticipate a market downturn, you might switch to debt funds to protect your capital.
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Fund performance: If a particular fund is underperforming consistently, you may want to switch to a better performing option.
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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.