ULIP vs TULIP (Term with Unit Linked Insurance Plan)
Mixing insurance with investment sounds smart, but the products that do this can confuse anyone. ULIPs have been a popular pick for decades now. TULIPs are newer and slowly catching attention. They look alike, yet the way they handle your money is poles apart. If you've been stuck between the two, this piece will walk you through what each one does and where they differ.
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- ULIP vs TULIP
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 is a Unit Linked Insurance Plan (ULIP)?
ULIP is short for Unit Linked Insurance Plan. Insurance companies sell it as a two-in-one product, meaning you get life cover and an investment opportunity rolled into one policy. When you pay your premium, the company splits it. One part keeps your life insurance running. The other part is parked in market funds, equity, debt, or balanced, based on what you choose.
The investment side moves with the market. Some years it climbs, some years it dips. You can shift your money between funds whenever you want, which is handy when markets get shaky. There's a lock-in of five years, so you can't touch the money before that.
What ULIPs Bring to the Table
- Insurance and investing handled by one policy
- Premium split between cover and market funds
- Freedom to switch funds based on market mood
- Tax deductions under 80C, plus possible tax-free maturity under 10(10D)
- Five-year lock-in period
What is a Term with Unit Linked Insurance Plan (TULIP)?
TULIP is the shorter way of saying Term with Unit Linked Insurance Plan. The concept is fairly new but gaining traction. It pairs a term insurance policy with a unit-linked investment, giving you the best of both worlds without the heavy cost.
Since term plans are far cheaper than traditional life cover, a bigger share of your premium goes into investments. That's the main pitch, more protection and more money working for you in the market.
What Makes TULIPs Stand Out
- Term cover plus unit-linked investment in one go
- Bigger life cover for a smaller premium
- More of your money gets invested, not spent on charges
- Good fit if you want both strong protection and growth
- Returns are tied to fund performance
ULIP vs TULIP: Where They Actually Differ
Even though both products bring insurance and investing under one umbrella, the structure isn't quite the same. Here's a closer look at where they part ways.
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Cover Amount
ULIPs give you life cover that's about ten times your yearly premium. Not bad, but not huge either. TULIPs ride on term insurance, so the same premium can get you a much larger cover. For families with big responsibilities, this matters a lot.
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How Premium is Used
When you pay a premium for a ULIP, it doesn't go straight into investments. The insurer first cuts out mortality charges, fund management fees, and a few admin costs. Whatever is left after these deductions is what actually gets invested. TULIPs work a little differently. Their structure is simpler, which means fewer deductions chip away at your money, and a bigger chunk ends up in the investment pool.
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The Cost Side
ULIPs are known for layered charges. Some are visible, some hide in the fine print. TULIPs run on a leaner cost structure, which means fewer deductions chipping away at your returns over time.
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What You Get at Maturity
ULIPs pay you the fund value once the policy term ends. TULIPs work similarly, but the maturity payout depends mostly on how well your investment fund has done. The term part doesn't add to maturity, since term insurance only pays out on death.
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What Happens in Case of Death
ULIPs pay out either the sum assured or the fund value, whichever is higher. TULIPs are designed differently. The nominee can get both, the term insurance payout and the accumulated fund value, depending on how the plan is built.
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How Flexible Are They?
ULIPs allow fund switching, partial withdrawals after lock-in, and top-up premiums. TULIPs offer some of these features too, but the options can vary between insurers.

Pros and Cons to Consider Before Investing
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ULIP
On the bright side
- Two financial goals handled in one shot
- Fund switching gives you control
- Tax perks make it more rewarding
On the flip side
- Charges feel heavy in the early years
- Life cover stays modest
- Returns can suffer when fees keep adding up
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TULIP
On the bright side
- Bigger life cover for less money
- A larger share of the premium gets invested
- Charges are simpler and lighter
On the flip side
- Still a newer product, so options are limited
- Market risk applies just like any equity-linked plan
- Won't suit those looking for old-school endowment-type benefits
- SBI Life ULIP Funds
- HDFC Life ULIP Funds
- Axis Max Life ULIP Funds
- ICICI Life ULIP Funds
- Tata AIA Life ULIP Funds
- Bajaj Life ULIP Funds
- Aditya Birla Sun Life ULIP Funds
- Kotak Life ULIP Funds
- PNB MetLife ULIP Funds
- Canara HSBC Life ULIP Funds
- Pramerica Life ULIP Funds
- Bandhan Life ULIP Funds
- Aviva Life ULIP Funds
- Bharti AXA Life ULIP Funds
- Edelweiss Tokio Life ULIP Funds
- Future Generali India Life ULIP Funds
- Exide Life ULIP Funds
- Reliance Nippon Life ULIP Funds
- IndiaFirst Life ULIP Funds
- Ageas Federal Life ULIP Funds
- Star Union Dai-ichi Life ULIP Funds
| Fund Name | NAV |
AUM |
5 Yr Returns |
10 Yr Returns |
|---|---|---|---|---|
| SBI Life Balanced Fund | ₹71.09 | ₹18807 Cr | 5.16% | 8.55% |
| SBI Life Bond Fund | ₹51.1 | ₹14964 Cr | 5.1% | 5.97% |
| SBI Life Equity Fund | ₹188.33 | ₹77251 Cr | 5.44% | 10.21% |
| SBI Life Equity Optimiser Fund | ₹53.11 | ₹2477 Cr | 6.38% | 10.26% |
| SBI Life Growth Fund | ₹91.22 | ₹2699 Cr | 5.59% | 9.86% |
| SBI Life Money Market Fund | ₹37.89 | ₹483 Cr | 6.07% | 5.87% |
| SBI Life Top 300 Fund | ₹54.15 | ₹1874 Cr | 5.46% | 10.75% |
| SBI Life Pure Fund | ₹26.94 | ₹1191 Cr | 5% | 9.33% |
| SBI Life Bond Optimiser Fund | ₹22.4 | ₹3142 Cr | 5.96% | - |
| SBI Life Midcap Fund | ₹49.05 | ₹64395 Cr | 11.86% | 15.35% |
| SBI Life Corporate Bond Fund | ₹16.65 | ₹1010 Cr | 5.06% | - |
| SBI Life Balanced Pension | ₹71.49 | ₹854 Cr | 5.61% | 9.43% |
| SBI Life Equity Optimiser Pension | ₹57.15 | ₹1081 Cr | 6.69% | 11.11% |
| SBI Life Equity Elite II | ₹49.81 | ₹11198 Cr | 5.72% | 9.89% |
| SBI Life Index | ₹44.29 | ₹81 Cr | 5.1% | 10.3% |
| SBI Life Index Pension | ₹46.27 | ₹22 Cr | 5.17% | 10.36% |
| SBI Life Top 300 Pension | ₹53.39 | ₹745 Cr | 5.69% | 11.01% |
| SBI Life Discontinued Policy Fund | ₹25.99 | ₹10947 Cr | 5.59% | 5.76% |
| SBI Life Bond Pension | ₹45.55 | ₹558 Cr | 5.14% | 6.26% |
| SBI Life Equity Elite | ₹83.59 | ₹11 Cr | 7.42% | 12.61% |
| SBI Life Equity Pension | ₹72.22 | ₹13267 Cr | 6.29% | 11.12% |
| SBI Life Growth Pension | ₹72.3 | ₹678 Cr | 6.28% | 10.46% |
| SBI Life Money Market Pension | ₹35.01 | ₹172 Cr | 6.02% | 5.85% |
| SBI Life P-E Managed | ₹37.67 | ₹185 Cr | 6.35% | 8.81% |
| SBI Life Guaranteed Pension GPF070211 | ₹26.9 | ₹1 Cr | 4.89% | 5.68% |
| SBI Life Bond Pension II | ₹23.62 | ₹27769 Cr | 4.84% | 5.57% |
| SBI Life Equity Pension II | ₹39.48 | ₹10436 Cr | 5.03% | 10.45% |
| SBI Life Money Market Pension II | ₹21.36 | ₹1466 Cr | 5.78% | 5.6% |
| SBI Life Discontinue Pension Fund | ₹21.95 | ₹6012 Cr | 5.61% | - |
| SBI Life Group Growth Plus Fund | ₹56.31 | ₹3 Cr | 5.82% | - |
| SBI Life Group Debt Plus Fund | ₹39.31 | ₹114 Cr | 4.84% | - |
| SBI Life Group Balance Plus Fund | ₹47.78 | ₹10 Cr | 5.57% | - |
| SBI Life Group Balance Plus Fund II | ₹27.28 | ₹1290 Cr | 6.41% | - |
| SBI Life Group Debt Plus Fund II | ₹26.42 | ₹480 Cr | 5.6% | - |
| SBI Life Group Growth Plus Fund II | ₹26.5 | ₹282 Cr | 6.17% | - |
| SBI Life Group Short Term Plus Fund II | ₹21.81 | ₹22 Cr | 5.76% | - |
| SBI Life Group Money Market Plus Fund | ₹14.21 | ₹2 Cr | 3.35% | - |
| SBI Life Group Balanced Pension Fund | ₹10.11 | ₹191 Cr | - | - |
Which One Should You Choose?
There's no one-size-fits-all answer here. If you like the idea of insurance and investment growing hand in hand under a single plan, a ULIP can do the job. But if your bigger worry is making sure your family is well-protected while your money also grows, TULIP is worth a serious look.
Young earners with dependents usually benefit more from TULIPs because of the higher cover at lower cost. Those who already have term insurance and want a separate investment-cum-cover plan often go for ULIPs. It really comes down to your personal goals, income, and how much risk you're willing to take.
Wrapping It Up
ULIPs and TULIPs both deserve a spot in the financial planning conversation, but treating them as the same thing would be a mistake. ULIPs are built for people who want a steady mix of insurance and investment in one place. TULIPs are made for those who need stronger protection without putting their wealth goals on the back burner. Sit down, look at your numbers, compare the charges, and read every clause before signing anything. Picking the right plan now can save you a lot of regret later.
FAQs
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Can I move from a ULIP to a TULIP?
There's no straight switch between the two. To make the change, you'll need to close your current policy first and then sign up for the other one as a brand new plan. Keep in mind, surrendering early may cost you a bit. -
Are returns guaranteed in either plan?
No, that's not how these products work. Your money goes into market-linked funds in both cases, which means the final amount you get depends on how those funds do over the years. Some years are good, some aren't. -
Do TULIPs qualify for tax benefits?
They do. The premium you pay can be claimed as a deduction under Section 80C, up to the limit allowed. The amount you receive at maturity is also exempt under Section 10(10D), as long as your policy ticks the conditions laid out by the tax rules. -
What's the lock-in period for a TULIP?
A TULIP locks your money in for five years, same as a ULIP. You won't be able to pull out funds before that, so it's worth being sure about the commitment before you sign up.
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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.
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