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What are the Differences Between ELSS ULIP and Mutual Funds?

 What are the Differences Between ELSS ULIP and Mutual Funds?
  • 16th Mar 2022 |
  • 313

Today, investing money in the right place can be a little tricky as there are so many investment options available. Moreover, each plan or scheme claims to be the best and promises to provide the best returns possible for your investment. We are well aware that all the product-related information is readily available online and that details are the key to making the right choice. ELSS, ULIP, and Mutual Funds - all being the top investment products of today generally confuse investors to decide as to what is the right option to pick out of them. So, before planning your next investment step, let’s have a look at the comparison of ULIP vs ELSS vs Mutual Funds. Before we move on to a comparison between these investment options, let’s understand what they are in brief.

What is ELSS?

ELSS stands for Equity Linked Savings Scheme and is a kind of Mutual Fund. In fact, it is the only Mutual Fund that allows tax deduction under Section 80C of the Income Tax Act of 1961. There are many other features of ELSS that make it an attractive investment option for many in comparison to other products

What is ULIP?

ULIP or Unit Linked Insurance Plan is an investment tool with the added benefit of life insurance. ULIP is a diverse investment and insurance tool that gives you an option to choose where to invest your funds and also to switch between them according to market trends if required. There are various advantages of ULIP that make it one of the most attractive investment choices today. Although many investors make a comparison between ULIP and Mutual Funds, both are quite different. Also, before planning on investing, one must decide his financial goal and look for the best ULIP funds in India as per their needs.

What are Mutual Funds (MFs)?

Mutual Funds are an investment tool where a company collects money from many people and invests it in bonds, stocks, money markets, and other assets to yield profits. Each investor holds a share which represents the equivalent part of these holdings.

ULIP vs ELSS vs Mutual Funds




Mutual Funds


May yield varied returns, as the investors get to manage the investment among different funds like equity, debts, hybrid funds, etc.

As ELSS is linked directly to the market, the returns depend totally on the scheme choice.

Returns on Mutual Funds depend on various factors such as the portfolios and management of investments. They cannot be predicted.

Lock-in Period

ULIP Policy has a minimum lock-in period of 5 years to reach maturity.

An ELSS has a minimum lock-in period of 3 years to reach maturity.

There is generally a 3-years lock-in period. However, it may change as per the policy.

Tax Benefits

It has various tax benefits on investments up to ₹2,50,000/annum. Taxes are applicable on amounts invested above this value.

Generally taxed at 10% for investments above ₹1,00,000/-.

Mutual Funds have varied taxation based on multiple factors.

Liquidity options

Funds may be available after completion of the lock-in period. This may vary based on policy guidelines

Funds Are available after completion of the lock-in period.

Can be sold as per the investors’ choice.

Before you make your investment move, it is suggested to do proper research. However, if you decide to invest in a ULIP plan, it is recommended to check the advantages of ULIP, compare the best ULIP funds in India, understand how ULIP works, and then put in your hard-earned money!

Kotak e-Term Plan


  • Nominal Cost
  • Multiple Plan Options
  • Flexible Payout Options
  • Critical Illness Rider
  • Tax Savings
  • Long term Coverage

Ref. No. KLI/22-23/E-BB/492


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