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All About ULIPs vs. ELSS

Published On Jun 30, 2021 6:26 PM By InsuranceDekho

Unit Linked Insurance Plans (ULIPs) and Equity Linked Savings Scheme (ELSS) are two popular insurance types. They both have their benefits and are useful in their own rights. An insurance plan is a vital part of your financial future. It helps you retain your wealth in a fruitful and efficient manner and even provides opportunities for growing it. 

What are ULIPs?

ULIPs are insurance plans that also provide investment opportunities in market-linked investment plans. Unlike traditional insurance plans where the policyholder has no control over where their money is being invested in, ULIPs let the insured choose which investment fund they want to invest in. There are multiple options available with varying degrees of risks and returns available.

What are ELSS Funds?

ELSS funds are equity-linked savings schemes that help in wealth creation as well as provides huge benefits in terms of tax savings. This type of insurance plan provides tax benefits under Section 80C of the Income Tax Act of India and the policyholder can save up to more than 1 Lakh INR in tax benefits. The dual advantages of ELSS funds make it a popular choice.

Difference between ULIPs and ELSS Funds

To get better insights into the ULIPs vs. ELSS discussion, take a look at their differences.




Facilities Provided

Provides life cover and insurance benefits along with investment opportunities in market-linked funds

Provides great tax benefits and various equity investment opportunities

Lock-in Period

5 years

3 years


Depends on market trends with respect to the investment fund chosen

Depends on the scheme since it is a market-linked fund

Risk Involved

Depends on the policyholder's choice of fund and each of them has varying degrees of risks involved

High-risk investment option because it depends on how the fund performs in the contemporary market

Charges Levied

Multiple charges including fund management charges, premium allocation charges etc.

Fund management charges and exit charges




Loyalty Benefits

Loyalty additions are applied if the plan is maintained for the entirety of the policy term

No loyalty benefits provided


As evident from the above differences, both ULIPs and ELSS funds cater to different needs. The verdict of which one is better depends entirely on the personal needs and financial ambitions of the policyholder. Both ULIPs and ELSS provide great investment and insurance opportunities. 

Also read 

Are ULIPs Better Than Fixed Deposits?

Most Frequently Asked Questions About ULIPs

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.        

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