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Comparison Between ULIP And SIP

Published On Dec 13, 2021, Updated On Dec 14, 2021

It's vital to first grasp the distinction between ULIP and SIP. As stated in the introduction, a ULIP is an insurance-cumulative investment plan that provides you with attractive long-term profits while also protecting you and your loved ones during the policy period. It has a number of benefits, including regular savings, family insurance, tax advantages, long-term investment, and so on.

A SIP, on the other hand, is a pure investing plan in which you make recurring contributions to a mutual fund of your choice. With as little as INR 500, a person can begin investing. The longer you keep your SIP invested, the better your returns will be.

The distinction between ULIP and SIP is widely misunderstood by many people. As a result, we'll go through the differences between them in detail in this post so you can comprehend them better. Without further ado, let's get started.

Comparison Between ULIP And SIP

Below are a few distinctions between ULIP and SIP:

  • Investing And Protecting At The Same Time

The life insurance facility is one of the fundamental differences between ULIP and SIP. Because a portion of your money is invested in an insurance plan, your family will get a death benefit if you die during the policy term. SIPs in mutual funds do not provide life insurance.

  • Options For Investment Funds

Individuals can invest in a variety of funds, including equity, debt, and hybrid funds, through ULIPs. Individuals can choose from these choices based on their risk tolerance and investment horizon when making a single ULIP investment. To invest in multiple types of funds via a SIP, you'll need to choose different mutual fund schemes.

  • Various Premium Payment Methods

You have several premium payment options with ULIPs: single premium (once-off premium), recurring premium, and limited premium. You must pay the premium amount according to the premium payment term that you have selected. Such a feature isn't available with SIPs. When you invest in a mutual fund via SIP, you don't have to commit to a specific time frame. As a result, you have unlimited time to invest.

  • Benefits From Taxation

ULIPs provide tax benefits on the premium paid and the benefits received under Sections 80C and 10(10D) of the Income Tax Act, 1961, respectively. In a given financial year, you can receive tax benefits of up to INR 1,50,000.

Except for investments in Equity-linked Saving Schemes, there are no tax advantages to SIPs (ELSS). You can earn tax exemptions of up to INR 1,50,000 per year under this scheme.

  • Partial Withdrawal Facility and Lock-in Period

After a five-year lock-in period, individuals can take advantage of the partial withdrawal feature of ULIPs. SIPs, on the other hand, allow you to take your money out whenever you wish. You must, however, serve a three-year lock-in term if you invest in an ELSS scheme through a SIP.

  • Facility For Switching Funds

If policyholders desire to safeguard or grow their investment, they can use ULIPs to choose between multiple fund options throughout the policy year. During a policy year, most assurers give a set number of free swaps. Aside from that, assurers provide a premium redirection service, which allows you to divert future premiums to a separate fund.

When it comes to SIPs, you can't change your funds during the investment time. You can, however, redeem your existing SIP and invest in a different fund. When you do this, the redemption will be counted as a tax deduction because it is viewed as a return.

  • Fees For Fund Management

In ULIPs, fund management charges are deducted to cover the costs of managing the numerous funds in which you've invested. This money could be in the form of equity, debt, or a combination of the two. The maximum fund management fee is 1.35 percent of the fund's total value every year. ULIPs also impose a variety of fees, including premium allocation, policy administration fees, mortality fees, partial withdrawal fees, and so on.

Fund administration charges, on the other hand, are deducted from SIPs at a rate of 2.5 percent or more per year. In comparison to ULIPs, SIPs only carry entry and exit load costs, and only under certain circumstances.


A mutual fund transaction in the form of a Systematic Investment Plan (SIP). You can invest in a mutual fund on a regular basis using a SIP. Savings will be more disciplined and consistent as a result of this. 

A ULIP (Unit Linked Insurance Plan) is indeed a sort of financial instrument that blends insurance coverage and a mutual fund-like transaction.

Also read: How Can I Buy ULIPs Plans Online 2021?

What Are The Differences Between ULIPs And SIPs?

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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