Why Should ULIPs Be Part of Your Financial Planning in 2025?

The ULIP Revolution in the Insurance Industry

Unit-Linked Insurance Plans (ULIPs) have significantly transformed in recent years. Once full of misconceptions and burdened by a lack of transparency, ULIPs are now emerging as a powerful tool for financial growth in 2025. This shift is partly due to a maturing market, stricter regulations, and a renewed focus on investor protection. Insurance companies are now designing ULIP products that meet a wider range of needs and risk appetites, making them a more flexible option for building a well-rounded financial portfolio. 

List of ULIP Funds ^~

Returns 3 Years 5 Years 10 Years

Fund Name

AUM

NAV

Returns (in %)

3 Year

5 Year

10 Year

High Growth Fund

Max Life

AUM:9,223 Cr

9,223 Cr

NAV

117.8

-1.18%

Returns

31.41%

Highest Returns

Returns

27.23%

Returns

18.4%

Get Details

Top 200 Fund

Tata AIA

AUM:2,188 Cr

2,188 Cr

NAV

178.96

-1.39%

Returns

25.93%

Returns

31.64%

Highest Returns

Returns

17.46%

Get Details

Accelerator Mid-Cap Fund II

Bajaj Allianz

AUM:5,410 Cr

5,410 Cr

NAV

83.89

-0.81%

Returns

22.05%

Returns

24.63%

Highest Returns

Returns

15.19%

Get Details

Opportunities Fund

HDFC Standard

AUM:35,672 Cr

35,672 Cr

NAV

78.5

-0.72%

Returns

23.03%

Returns

26.34%

Highest Returns

Returns

15.33%

Get Details

Equity II Fund

Canara HSBC Oriental Bank

AUM:3,509 Cr

3,509 Cr

NAV

42.02

-0.20%

Returns

15.54%

Returns

19.68%

Highest Returns

Returns

10.65%

Get Details

Accelerator Fund

AEGON Life

AUM:227 Cr

227 Cr

NAV

49.64

-0.44%

Returns

19.86%

Returns

23.34%

Highest Returns

Returns

13.81%

Get Details

Growth Opportunities Plus Fund

Bharti AXA

AUM:969 Cr

969 Cr

NAV

74.52

-0.45%

Returns

18.8%

Returns

23.54%

Highest Returns

Returns

14.99%

Get Details

Multiplier

Birla Sun Life

AUM:4,305 Cr

4,305 Cr

NAV

95.87

-0.87%

Returns

23.16%

Returns

27.22%

Highest Returns

Returns

16.07%

Get Details

Equity Top 250 Fund

Edelwiess Tokio

AUM:535 Cr

535 Cr

NAV

58.09

-0.44%

Returns

16.66%

Returns

20.46%

Highest Returns

Returns

11.92%

Get Details

Future Apex Fund

Future Generali India

AUM:95 Cr

95 Cr

NAV

57.56

-0.47%

Returns

19.19%

Returns

24.7%

Highest Returns

Returns

13.77%

Get Details

Opportunities Fund

ICICI Prudential

AUM:3,245 Cr

3,245 Cr

NAV

59.68

-0.41%

Returns

19.47%

Returns

23.3%

Highest Returns

Returns

12.73%

Get Details

Frontline Equity Fund

Kotak Mahindra OM

AUM:4,206 Cr

4,206 Cr

NAV

69.77

-0.35%

Returns

20.94%

Returns

24.59%

Highest Returns

Returns

14.6%

Get Details

Flexi Growth Fund

LIC

AUM:636 Cr

636 Cr

NAV

11.8

-0.08%

Returns

-

Returns

-

Returns

-

Get Details

Virtue II

PNB Metlife

AUM:3,137 Cr

3,137 Cr

NAV

70.68

-0.56%

Returns

18.81%

Returns

24.49%

Highest Returns

Returns

15.52%

Get Details

Pension Dynamic Equity Fund

Pramerica Life Insurance Limited

AUM:6 Cr

6 Cr

NAV

73.37

-0.26%

Returns

15.36%

Returns

19.36%

Highest Returns

Returns

11.27%

Get Details

Equity Fund

SBI

AUM:76,402 Cr

76,402 Cr

NAV

205.28

-1.16%

Returns

16.96%

Returns

20.21%

Highest Returns

Returns

12.2%

Get Details

Blue-Chip Equity Fund

Star Union Dai-ichi

AUM:1,302 Cr

1,302 Cr

NAV

35.32

-0.14%

Returns

13.42%

Returns

17.22%

Highest Returns

Returns

10.61%

Get Details

see more plans

Disclaimer :
˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

The Past and Present of ULIPs

The Early Days of ULIPs and Why They Got a Bad Reputation?

ULIPs have come a long way; their past wasn't always great. Here's what their early days looked like and the challenges they faced:

• The Good Intention: ULIPs were introduced in the 1970s to combine life insurance protection with the potential for growth through market-linked investments. This offered a unique benefit compared to traditional plans.

• Lost in Translation: The initial focus seemed to be on selling insurance with an investment tied on. This led to a lack of clarity about how the investment component actually worked.

• High Costs, Low Transparency: ULIPs in the early days often came with high hidden charges and complex fee structures. Investors weren't always fully informed about these costs, making it difficult to understand the true value of ULIPs.

• Hidden Costs: Early ULIPs came loaded with high charges – upfront commissions, policy allocation charges, and more. This meant less of your money actually went towards investment.

• Confusing Structure: The investment aspect of ULIPs could be complex, with fees and features not always clearly explained. This left many investors feeling lost and unsure.

• Focus on Insurance, Not Investment: The initial push for ULIPs seemed more about selling insurance with an investment add-on rather than highlighting the long-term growth potential. 

How ULIPs Became Investor-Friendly?

ULIPs have undergone a major change recently. Gone are the days of hidden charges and confusing structures. Here's how regulations and a shift in focus made ULIPs more investor-friendly:

• IRDAI’s Role: The Insurance Regulatory and Development Authority of India (IRDAI) stepped up with stricter regulations. These regulations mandated clear communication of charges, product features, and investment options. No more hidden fees or surprises. 

• Cost Cutting Crusade: ULIP charges have been significantly reduced. Lower upfront commissions, allocation charges, and a focus on efficiency have made ULIPs more cost-effective. More of your money goes towards growing your investment! For example:

  • They have completely eliminated policy administration and premium allocation charges.

  • After maturity, they also return the mortality charge.

  • In addition, fund management charges can now be a maximum of 1.35% per annum.

• Transparency: ULIPs now have clear product brochures. These brochures explain fees, fund performance, and features in an easy-to-understand manner, empowering investors to make informed decisions.

• Flexibility: Modern ULIPs offer more flexibility. You can invest as much as you want in equity and debt according to your risk appetite. You can invest 100% in equity or 100% in debt. And many companies don't even charge for fund switching!

• Focus on Investment Value: The core focus of ULIPs has shifted. Now, the emphasis is on the potential for market-linked growth alongside the life cover benefit. This aligns better with investors seeking long-term wealth creation.

• Increased Accessibility: Traditionally, ULIPs might have involved a lot of paperwork and limited access to information. Digitization has changed that. Online portals and mobile apps allow investors to easily access policy details, monitor fund performance, and make switches between funds. This transparency and ease of use make ULIPs more appealing to investors.

Here's the best part of New Age ULIPs:

Imagine if something unfortunate happens to you and you are no longer around. What will happen to your family and their future? Don't worry! With the waiver of premium benefit, the insurance company will pay your premium itself, so that your ULIP plan does not lapse and your investment for your goals continues.

Examples of New-Age ULIPs:

How 4G ULIPs Changed the Perception?

4G ULIPs, or Fourth Generation Unit Linked Insurance Plans, represent a significant upgrade in the ULIP industry. They address the past shortcomings of ULIPs and offer a more investor-friendly experience. Here's how 4G ULIPs have changed the game:

What are 4G ULIPs?

These are ULIPs with a renewed focus on transparency, flexibility, and cost-effectiveness.

Benefits of 4G ULIPs:

• Lower Costs: IRDAI regulations and a focus on efficiency have resulted in significantly reduced charges. This translates to more of your money being invested and potentially growing.

• Enhanced Transparency: 4G ULIPs come with clear communication of fees, fund performance, and product features.

• Flexibility is King: Investors can now switch between investment funds within the ULIP. This allows you to adapt your investment strategy to changing market conditions and evolving goals.

• Focus on Investment Value: The emphasis in 4G ULIPs has shifted towards the potential for market-linked growth alongside the life cover benefit. This aligns better with investors seeking long-term wealth creation.

How 4G ULIPs Reshaped the Industry:

• Restored Trust: By addressing past issues and prioritizing transparency, 4G ULIPs have helped rebuild trust in ULIPs as a reliable financial tool.

• Empowered Investors: Clear communication and flexibility empower investors to make informed decisions and manage their ULIPs effectively.

• Increased Competition: The focus on cost-effectiveness and investor benefits has led to increased competition among insurers, potentially leading to even better ULIP options in the future.

Are ULIPs Right for You?

ULIPs can be a strong contender if you want:

• Growth Potential: Invest for long-term wealth creation alongside life cover.

• Flexibility: Adapt your investment strategy within the ULIP as your goals evolve.

• Transparency: Make informed decisions with clear communication of fees and features.

Conclusion

In conclusion, ULIPs have shed their past baggage and emerged as strong contenders in the financial planning area. With increased transparency, flexibility, and the potential for market-linked growth, ULIPs are definitely worth considering for your financial planning and investments in 2025.