ULIP Vs. Fixed Deposit: Which is Better and Why?

A Fixed deposit is the preferred saving option of many as it provides a higher rate of interest than a savings account. However, on December 7, 2022, when the Monetary Policy Committee (MPC) declared to increase the repo rate by 35 basis points to 6.25%, the interest rates of FD in all the banks in India took a hit. As a result, people are looking for alternatives to FDs that provide similar or better returns.

Read more
Best ULIP Plans
  • Guaranteed Tax Savings

    Guaranteed Tax Savings^

    Under sec 80C & 10(10D)
  • savings

    ₹1 Crore

    Invest ₹10k Per Month*
  • Zero LTCG Tax

    Zero LTCG Tax^

    Unlike 10% in Mutual Funds
We are rated~
rating
58.9 Million
Registered Consumer
51
Insurance Partners
26.4 Million
Policies Sold
In-built life cover

Top performing plans with High Returns*

Invest ₹10K/month & Get ₹1 Crore returns*

+91
Secure
We don’t spam
Please wait. We Are Processing..
Your personal information is secure with us
Plans available only for people of Indian origin By clicking on "View Plans" you agree to our Privacy Policy and Terms of use #For a 55 year on investment of 20Lacs #Discount offered by insurance company
Get Updates on WhatsApp
We are rated~
rating
58.9 Million
Registered Consumer
51
Insurance Partners
26.4 Million
Policies Sold

One of the attractive options is ULIP. Hence, investors have started comparing ULIP VS Fixed Deposits. Let us look at how ULIPs compare to FDs and find out is ULIP better than FDs.

What is ULIP?

ULIP is a life insurance plan that provides a maturity benefit as well. Part of the premiums you pay is invested in your chosen equity or debt fund. The maturity amount includes the returns earned on this investment. But Is a ULIP better than FD?

Yes. A ULIP provides more features and better versatility as compared to FDs. We give you a few reasons why ULIP is better than fixed Deposit-

  1. Life insurance

    The ULIP Vs. Fixed deposits can be better understood based on life insurance. The most prominent advantage of ULIP over FD is that they offer Life insurance. A ULIP provides a death benefit to your loved ones in case of your demise. In this way, you can ensure that your dependents are cared for even in your absence. Thus, you get the dual advantage of life insurance in addition to the chance of earning good returns via a ULIP.

  2. Flexibility

    Flexibility shows how UILP is better than FD. ULIPs are very flexible. You can switch between debt and equity instruments to take advantage of the market conditions. Therefore, you stand a chance of earning better returns with ULIPs. However, FDs operate at a fixed rate of interest, and hence the returns will mostly be the same.

  3. Tax saving

    Tax saving is another reason that people started comparing ULIP Vs. Fixed Deposit. The interest income that you earn on fixed deposits is taxable. However, ULIPs can help you save on taxes. The premiums that you pay toward ULIP are eligible for a tax deduction. The maturity amount of a ULIP is also tax-exempt. As a result, ULIPs are an excellent tax-saving instrument.

    Is ULIP better than FD? Yes, ULIPs are a better place to invest than Fixed Deposits. Apart from ensuring that your money is safe and providing you with life cover, they also give you a chance to earn by investing your money. This versatility is what makes them one of the best avenues to put your money in. When purchasing a ULIP plan, make sure to go through all the features and read the terms and conditions in the policy document thoroughly. 

Fixed Deposit VS ULIP

Let us discuss Fixed Deposit Vs. ULIP to further determine if ULIP is better than FD?

FD ULIP
You can avail of tax exemption only on the investment amount; the returns are taxable You can avail of tax deductions on premiums, as well as the maturity amount
FD interest rates can go down on account of inflation ULIP, especially, debt related ULIP is likely to fetch more returns as bond rates go up
FDs offer no life cover ULIPs, in addition to saving your money and fetching you returns on your investment, also provide life insurance
FDs are not flexible. Once you invest your money, it has to stay in the same place for the term of the FD or till you decide to withdraw. You can easily change your fund allocations from equity to debt and vice versa according to the market conditions.
You earn a fixed interest on FDs The returns vary according to the market conditions

FAQ's

  • Can ULIP give higher returns?

    Ans: Even though the returns fluctuate depending upon the type of fund invested in, that is, equity, debt, or hybrid, Unit Linked Insurance Plans generally offers high returns if the asset allocation is done intelligently.
  • Which gives you better return MF or ULIP?

    Ans: When it comes to tax saving, ULIPs (Unit Linked Insurance Plans) are the best investment options to put your bets on. On the one hand, ULIPs offer you tax exemption up to Rs. 1,50,000 annually under Section 80C of the Income Tax Act. On the other hand, Mutual Funds do not offer any tax exemptions to investors unless invested in ELSS (Equity Linked Savings Scheme) Funds.
  • Is ULIP good for 5 years?

    Ans: ULIPs are considered as one of the long-term investment options. One can exit from a ULIP plan after 5 years, but to reap the real benefits of ULIP, one must invest their money for at least 15-20 years.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^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
~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.

Grow your wealth & meet your Financial goals

Systematically Invest in high growth plans with returns upto 18%*
View plans
Standard T & C Apply*
Insurers Offering ULIPs

Tata AIA

Aditya Birla Sun Life

Bajaj Allianz

Max Life

HDFC Life

ICICI Prudential

Bharti AXA Life

Edelweiss Life

Kotak Life

Future Generali

PNB MetLife

SBI Life

Aviva

Bandhan Life

Canara HSBC

IDBI Federal

IndiaFirst

Pramerica Life

Reliance Life

Sahara Life

Shriram Life

Star Union

View more insurers
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
Invest More Get More!
You Get
₹1 Crores*
You Invest
₹10K/month
You Get
₹80 Lakhs*
You Invest
₹8K/month
You Get
₹50 Lakhs*
You Invest
₹5K/month
capital guarantee
Investment Calculator
  • One time
  • Monthly
/ Year
Sensex has given 10% return from 2010 - 2020
You invest
You get
View plans

Ulip plans articles

Recent Articles
Popular Articles
Mortality Charges in ULIPs

16 Jul 2024

Mortality charges in a ULIP (Unit Linked Insurance Plan)
Read more
Benefits of Buying Online ULIP Over Offline ULIP

21 Jun 2024

Unit Linked Insurance Plans (ULIPs) have emerged as a popular
Read more
Why Should ULIPs Be Part of Your Financial Planning in 2024?

19 Jun 2024

Financial planning requires agility and growth potential. ULIPs
Read more
ULIP for Wealth Creation

19 Jun 2024

Unit-linked insurance Plans (ULIPs) are financial products that
Read more
Dynamic Asset Allocation

21 May 2024

Dynamic Asset Allocation involves actively adjusting investment
Read more
ULIP Calculator
  • 08 Oct 2018
  • 122035
A ULIP Calculator is a financial tool designed to help you compare ULIP plans and estimate the maturity amount
Read more
SBI Life Smart Privilege Plan: Benefits & Features
  • 11 Jan 2017
  • 88600
SBI Life Smart Privilege is a unit-linked, non-participating life insurance plan offered by SBI Life Insurance
Read more
7 Things to Know About the Tax Benefits of ULIPs
  • 06 Oct 2021
  • 15153
Nowadays, Unit Linked Insurance Plans, i.e., ULIPs, have evolved as the popular income tax saving investment
Read more
ULIP Returns in 5 Years
  • 06 Dec 2023
  • 1934
ULIP means Unit Linked Insurance Plan. It is a unique financial instrument that combines insurance coverage with
Read more
Taxability of ULIP on Surrender
  • 28 Dec 2023
  • 2150
ULIPs, or Unit Linked Insurance Plans, combine insurance and investment. The taxability of ULIP on surrender
Read more

top

Become a Crorepati

Invest ₹10K/Month & Get ₹1 Crore returns*

Mobile +91
*T&C Applied.
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL