ULIP- Unit Linked Insurance Plan

List of Best ULIP Plans in India 2026

Below are some of the best ULIP Plans in India:

Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.” The returns are the returns of the best-performing fund in the plan. * RSI: Returns Since Inception Data Source: Value Research

How Does ULIP Work?

A ULIP gives you two things in one plan — life cover and market-linked investment. When you pay the premium, the insurer deducts a few charges (mortality, admin, and fund management fees), and the rest is used to buy units in a fund you pick. Each unit has a price called the NAV, which moves up or down based on how the market performs.

You choose where the money goes — equity, debt, or a mix of both — and you can switch funds later if your goals change. Your investment keeps growing through the policy term while the life cover stays in place. At maturity, you get the fund value. If something happens to the policyholder during the term, the nominee gets either the sum assured or the fund value, whichever is higher.

Understanding How a ULIP Plan Works

Consider the case of Rohan, a 35-year-old software engineer, who purchases a ULIP to build a corpus for his son's higher education and his own early retirement. He opts for a policy term of 15 years with an equity-oriented fund strategy aligned to his long-term horizon.

Policy Details

Scenario 1: Death Benefit (If Rohan passes away at age 45)

His nominee receives the higher of:

• Sum Assured: ?1,20,00,000

• Fund Value = NAV at that time × Total Accumulated Units

Example: If NAV at the time of claim = ?28 Fund Value = 28 × 11,30,000 = ?3,16,40,000 Payout to nominee: ?3,16,40,000 (since Fund Value exceeds Sum Assured)

Scenario 2: Maturity Benefit (Rohan completes 15 years)

Rohan receives the entire accumulated fund value to channel toward his son's education and retirement planning.

Example: If NAV at maturity = ?55 Fund Value = 55 × Total Accumulated Units Payout: Market-Linked Fund Value

What are the Features of ULIP Plan?

• Premium Allocation: Not your entire premium goes into investment. A portion is deducted for mortality charges, admin fees, and fund management; what remains gets allocated to your chosen funds. The allocation percentage usually improves in later policy years.

• Fund Switching: You can shift your invested money between available funds, for example, from equity to debt, depending on market conditions or your risk appetite at that time. Most insurers allow a few free switches per year before charges kick in.

• Partial Withdrawals: Once the 5-year lock-in is over, you can withdraw a part of your fund value if you need money urgently. The policy continues running, just with a reduced corpus.

• Top-Up Premiums: Whenever you have extra money lying around, you can put it into your existing ULIP as a top-up over your regular premium. It goes into the same funds and gets invested accordingly.

What are New Age ULIPs?

New-age ULIPs, often called 4G ULIP plans, have changed the game by cutting out the heavy costs that used to eat into your returns. Unlike older versions, these don't charge you for premium allocation or policy administration, meaning more of your money actually goes into the market. Features like mortality charges that are returned upon your policy's maturity help provide you with free life cover if you outlive the policy term. It is a much better investment strategy that concentrates on keeping your wealth intact, instead of filling your insurer’s pocket with high fees.

What are the Benefits of ULIP Plans?

• Dual Benefit: A ULIP offers two benefits in one plan: life cover and investment. You don't need to buy them separately, which makes it a practical choice for people who want both under one roof.

• Long-term Wealth Creation: ULIPs are built for the long haul. The longer you stay invested, the more your money gets a chance to grow. Staying put through market ups and downs is usually where the real gains come from.

• Financial Protection: Your family gets a death benefit if something happens to you during the policy term. It's not a bonus feature; it's a core part of why ULIPs exist in the first place.

• Switching is Easy: You just log in, select the fund you want to move to, and it's done. No forms, no calls, no waiting. Takes barely a few minutes.

Different Types of ULIP

ULIPs are classified based on their purpose and death benefit. Let us learn about them in detail.

1. Classification by Financial Goals

   Different ULIPs are built to handle specific life stages, from retirement and wealth building to education and health.

   • ULIPs for Retirement Planning: These plans act as a long-term safety net, helping you quietly build up a retirement fund over the years. By the time you stop working, that investment portion has had the time to grow into a significant sum. You can then turn that pool of money into a regular monthly income, making sure you can keep living comfortably even after the salary checks stop.

   • ULIPs for Building Wealth: In your 20s or 30s, these plans are great for long-term growth. They allow you to put money into market-linked funds so you can build up enough capital to reach your future financial targets.

   • ULIPs for Child Education Plans: These are designed to protect a child's academic future. The most important part is the "waiver of premium." If the parent passes away or can't work due to a serious illness, the insurance company pays the remaining premiums. This ensures the child still gets the full payout exactly when they need it for college or school.

   • ULIPs for Health and Medical Benefits: Some ULIPs offer a financial cushion for medical issues. Besides the investment and life cover, they provide cash to help deal with health emergencies or expensive hospital treatments when they come up.

   Read more

2. Classification by Death Benefits

   ULIPs come in two types: Type 1 prioritizes life coverage with a higher payout on demise, while Type 2 emphasizes investment, offering the fund value on death. Both types allow customization for diverse financial goals.

   Parameter	Type 1 ULIP Plans	Type 2 ULIP Plans
   Lock-in period	5 years	5 years
   Investment options	Equity, debt, or a mix of both	Equity, debt, or a mix of both
   Returns	Market-linked returns	Market-linked returns
   Death Benefit	Upon death, these plans pay the nominee either the life cover amount or the current fund value, whichever is higher. Example: If your investments have increased to ?50 Lakh and your life cover is ?40 Lakh, your family gets ?50 Lakh.	With these plans, the nominee gets both life cover and investment value. Because it pays out both, the premiums are usually higher, but the final payout is much larger. For instance, if your life cover is ?40 lakh and your investment grows to ?50 lakh, the nominee receives ?90 lakh in total.
   Objective	Guaranteed death benefit payout	Higher returns
   Suitable for	Risk-tolerant investors	Risk-tolerant investors
   Sum at Risk	As the fund value steadily increases over time, the amount of risk faced by the insurance company decreases correspondingly.	As the fund value steadily increases over time, the amount of risk faced by the insurance company decreases correspondingly.

3. Classification by Funds

   There are many types of funds available with ULIP plans, such as equity, debt, and hybrid funds. These choices are available to investors based on how much risk they are willing to take and what their financial goals are.

   • Equity Funds: They are risky but can pay off big. These buy stocks to make money over time. They are unstable, so only pick these if you can ignore short-term drops in the market.

   • Debt Funds: These invest in bonds to keep your money secure and earn stable returns. They won't rise as quickly as stocks, but they will keep your money safe from market crashes.

   • Hybrid Funds: They are a good choice for people who want to be in the center. They combine equities and bonds to provide you some gain while also giving you a safety net to protect you from losing too much.

Tax Benefits on ULIPs

The ULIPs (Unit-Linked Insurance Plan) taxation structure can be comprehended from the information provided below.

1. LTCG Exemption

   Long-term capital gains (LTCG) tax is exempted on ULIPs for annual premiums up to 2.5 lacs.

2. Income Tax Benefits Under 80C

   With a maximum exemption of Rs. 1.5 lakh under Section 80C, ULIP premiums qualify for tax savings. Also, you don't have to pay tax on your ULIP maturity payout. Just ensure your life cover is at least 10 times your annual premium to get the full benefit. If the cover is lower than that, your tax deduction gets capped at 10% of the sum assured.

3. Income Tax Benefits Under 10(10D)

   Maturity payouts from a ULIP don't attract tax. For any policy issued before February 1, 2021, the final amount is tax-free regardless of how high your yearly premiums were.

   It is very easy to claim these benefits. Your premiums reduce your taxable income under Section 80C, and the final maturity amount is exempt under Section 10(10D). ULIPs work well if you want to look after your family and cut down your tax bill at the same time.

Disclaimer: Tax benefits and savings are subject to changes in tax laws. ^ Maturity benefits are applicable for annual premiums up to 2.5 lacs.

ULIP vs Other Investment Options Under 80C

Below is a detailed comparison of ULIP plans with other investment options available:

*ULIP maturity proceeds remain tax-free under Section 10(10D) if the annual premium does not exceed ?2.5 lakh for policies issued after Feb 2021; otherwise, maturity is taxable.

Market-Linked Wealth Creation vs. Traditional Insurance

What are the Charges Related to ULIP Plans?

ULIP charges encompass premium allocation, fund management, policy administration, mortality, and surrender charges. Understand these fees for informed investment decisions.

They are subdivided into the following categories:

1. Premium Allocation Charges

   Typically 0% to 5% of the premium. Deducted upfront from the premium paid to cover initial expenses like agent commission, underwriting, and policy issuance.

2. Fund Management Charges (FMC)

   Max 1.35% p.a. as per IRDAI (Charged daily).

   • Fee for managing the investment funds (equity, debt, etc.).

   • Deducted before calculating the daily Net Asset Value (NAV).

3. Policy Administration Charges

   Think of this as a basic service fee. The insurer deducts a small amount periodically to handle your account, keep records, and run the plan. They either charge a flat fee or take a small cut directly from your premium.

4. Mortality Charges

   This is the actual price for your life insurance cover. Since the insurer is taking a risk on your life, they charge you based on things like your age and health. Instead of asking for cash, they just cancel a few of your investment "units" each month to cover the cost.

5. Fund Switch Fees

   One of the best parts of a ULIP is moving your money between different funds. Most insurers give you a few "freebies" every year. Once you use those up, they'll charge you a small fee, usually between ?100 and ?500, each time you want to move your money again.

6. Discontinuance or Surrender Charges

   If you cancel your ULIP within the first four years, you’ll be hit with a discontinuance fee. The good news is that these surrender charges disappear entirely once you hit the five-year mark. Expect to pay between ?1,000 and ?4,000. The final cost changes based on your premium amount and the current value of your fund. These rates aren't random, either, the IRDAI caps them to make sure insurers only recover their basic administrative costs.

ULIP Plans by Insurance Companies

Picking the right ULIP is a big deal for your long-term money goals. Here are some of the top-rated plans currently available from Indian insurers:

Disclaimer: ˜ 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. The sorting is done in alphabetical order (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

ULIP Plan Buying Guide

How to Choose the Best ULIP Plans According to Your Goals?

Picking the right ULIP is not just about finding a plan that has delivered good returns in the past. The plan has to fit your financial situation, the goals you have set, and how much risk you can stomach. Here is what you should look at:

1. Evaluate Your Goals

   Before putting money into a ULIP, get clear on what you are investing for. Is it your child's college fees, your retirement, or simply building a corpus over time? The goal you set will shape your investment horizon, your risk appetite, and the kind of fund that suits you. If you have 20 years on hand, equity-heavy funds work in your favour. If a financial milestone is around the corner, debt or balanced funds are the safer bet.

2. Choose an Adequate Life Cover

   A ULIP is not purely an investment tool; it carries a life insurance component as well. The cover you opt for must be enough to keep your family financially stable if something happens to you. A common rule of thumb is to go for a sum assured that is at least 10 to 15 times your yearly income. Cutting down on cover just to lower your premium will only undermine the protection the plan is supposed to provide.

3. Understand the Key Features and Benefits

   No two ULIPs are built the same way. Look into what the plan actually offers, including fund switching, premium redirection, partial withdrawals, and loyalty additions, before you sign up. These features decide how much control you have over your money as years go by. A plan that fits your financial behaviour will always deliver more value than one picked purely on the basis of past returns.

4. Understand the Charges Under ULIP

   ULIPs carry several charges such as premium allocation charges, fund management charges, policy administration charges, and mortality charges. Each of these eats into the portion of your premium that gets invested. Going through these numbers across different plans before deciding is important, because even a small difference in fund management charges can quietly erode your corpus when compounded over many years.

Things to Avoid When Investing in a ULIP Plan

1. Ignoring Risk Tolerance

   ULIPs follow the market, so returns will go up and down. Pick a fund mix that actually fits how much risk you can handle.

2. Short-Term Goals

   ULIPs aren't for quick cash. With a five-year lock-in and market ups and downs, they only make sense if you're prepared to leave your money alone for years.

3. Focusing Only on Tax

   Don't buy a policy just to dodge taxes. Tax benefits are an added advantage, but the investment should first align with one's financial capacity and goals.

4. Frequent Switching

   Moving money too often can ruin your long-term growth. Stick to a solid plan instead of reacting every time the market shifts.

5. Underestimating the Timeline

   Don't cut your time short. Staying invested for years is the only way to beat market volatility and actually reach your targets.

Power of Compounding & Loyalty Additions Under ULIP Plan

If you look at a wealth chart, the first few years usually look like a flat line. Then, suddenly, it curves upward like a hockey stick. That’s not luck; it’s the result of two specific forces working together in a modern ULIP.

1. Power of Compounding in ULIP

   In a market-linked plan, your returns are reinvested automatically.

   • How it works: You earn a profit on your premium. Next month, you aren't just earning on your premium—you’re earning on your premium plus last month’s profit.

   • Why Time Matters: Compounding is a back-heavy process. If you invest $?5,000$ a month for 20 years, the growth you see in year 19 is often more than all the growth from the first 5 years combined. This is why "starting today" is more important than "starting big."

2. Loyalty Additions Under ULIP Plans

   Think of Loyalty Additions as a "thank you" from the insurance company for not being stopping the policy in between.

   • The Mechanism: Every few years (usually starting after year 5 or 10), the company adds extra "units" to your fund. This isn't money coming out of your pocket; it’s a percentage of your fund value or premium given back to you.

   • The Strategic Edge: These additions are great because they get reinvested immediately. They start compounding alongside your original money, effectively acting as an extra "booster" rocket for your portfolio.