Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak Guaranteed Fortune Builder

A plan that offers guaranteed income for your future goals. Know more

Kotak e-Term

Protect your family's financial future. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and life cover. Know more

Kotak e-Invest

Insurance and Investment in one plan. Know more

Kotak Lifetime Income Plan

Retirement years are the golden years of life. Know more


Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

What are the Differences Between ELSS ULIP and Mutual Funds?

Take a look at the comparison and differences between ULIP vs. mutual fund vs. ELSS before you plan for your next investment.

  • Nov 16, 2022

Today, investing money in the right place can be tricky as so many investment options are available. Moreover, each plan or scheme claims to be the best and promises to provide the best returns possible for your investment. We know 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 what is the right option to pick out of them. So, before planning your next investment step, let’s look at the comparison of ULIP vs mutual fund vs ELSS. Before we compare 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. 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 allows you to choose where to invest your funds and 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 compare ULIP and Mutual Funds, both are quite different. Also, before investing, one must decide his financial goal and look for the best ULIP funds in India 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 that represents the equivalent part of these holdings.

ULIP vs mutual fund vs ELSS

Here is the comparative Analysis of ELSS and ULIP in Table




Mutual Funds


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

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

Returns on Mutual Funds depend on various factors such as the portfolios and management of investments. Therefore, 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. However, 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 the completion of the lock-in period. However, this may vary based on policy guidelines.

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

It can be sold as per the investors’ choice.

Difference between ULIPs and mutual funds

You must first comprehend the differences between ULIPs and mutual funds in order to acquire some perspective on them. The following are some key distinctions between ULIPs and mutual funds.

Investment objective

A mutual fund is a pure investment product with the only purpose of generating wealth that has the potential to produce respectable returns over time. However, ULIPs have the advantage of being a market-linked investment in addition to being primarily an insurance product.

Return on investment

Since ULIPs invest in equities, debt, or a combination of the two, their returns can fluctuate. Depending on the sort of scheme chosen, mutual fund returns can also vary and might be low or high.

Lock-in period

Because ULIPs are insurance products, insurers set a lock-in term for these investments that is typically five years. The majority of mutual funds, particularly open-ended mutual funds, do not, however, with the exception of ELSS funds, which have a 3-year lock-in period.


ULIPs are now quite open thanks to recent regulatory changes introduced by the IRDAI; they now give up-front information on money allocation. Fund houses are required to provide a thorough report on the mutual fund investments in the case of mutual funds. Fund houses are advised to give comprehensive information on asset allocation, portfolio holdings, active fund manager(s), fees charged, etc., with regard to various schemes by financial markets regulator SEBI.


Tax on mutual funds: Depending on the holding duration, equity funds are subject to LTCG (long-term capital gains) and STCG (short-term capital gains) taxes of 10% and 15%, respectively (plus any relevant surcharge and Cess). After indexation, the LTCG tax rate for debt mutual funds is 20% (plus any applicable surcharge and Cess), whereas the STCG tax is determined by the investor’s income tax bracket. Under Section 80C of the IT Act, 1961, equity-linked savings scheme (ELSS) funds are eligible for a tax deduction of up to ₹1.5 lack.

Tax on ULIPs: Section 10(10D) of the Income Tax Act, 1961 provides that returns on ULIPs are tax-free.


An expense ratio, also known as a professional management fee and operational fee, is incurred when investing in mutual funds. Some mutual funds further impose an exit load, or fee for quitting the programme. The fees assessed for ULIPs include premium allocation fees, fund management fees, administrative fees, mortality fees, etc.

Before you make your investment move, it is suggested to do proper research. However, suppose you decide to invest in a ULIP plan. In that case, 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 Life Time Income Plan

Download Brochure


  • 6 Plan Options
  • Tax benefits ^
  • Higher annuity rates for higher purchase price
  • 4 Annuity Modes

Ref. No. KLI/23-24/E-BB/1052


- A Consumer Education Initiative series by Kotak Life

Similar Articles

A Quick Guide to Retirement Plans

Changing Jobs? Reinvest Your Retirement Funds

Retirement: A New Start to Life!

Turbocharge Your Retirement Savings with Annuities: Unlock Greater Returns

How To Choose The Right Pension Plan?

6 Signs That You Are Not Financially Ready For An Early Retirement

Retirement Planning for Millennials

What tax benefits are there on saving for retirement?

How to Register An EPF Grievance Online

Is ULIP Better Than FD?

Meaning of Sum Assured in a ULIP

Types of Pension Plans and Their Tax Benefits

Gift Your Parents a Sound Retirement Plan

7 Best Guaranteed Income Plans 2023 in India Their Eligibility, Features & Benefits

4 Tips to Avoid Running Out of Money in Retirement

The Rise of ESG Investing in Retirement Planning

What are the Benefits of ULIP - Explained

How Has NPS Performed in Comparison with Other Instruments?

How Much Corpus Does One Need for Retirement?

Pension Funds In India – Meaning, Overview, How Do Pension Funds Work, Types, Pension Plan Features and Tax Benefits

Types of Pension Plans for Your Retirement

5 Best Investment Options for Senior Citizens in India

Demystifying Retirement Financial Planning

What Are Superannuation Benefits?

What Retirement Would Look Like 30 Years From Now

The Significance of Number 8,000 in Retirement Planning

What are the Instruments Available for Building a Retirement Corpus?

What is an Annuity Plan, and How Does Annuity Plan Work?

ULIPs or Pension Plans – Which is a Better Retirement Plan?

6 investment options for the retired

What are the Charges Levied on ULIP?

Managing Your Money After You Retire

How Can NPS Help You Save Tax?

Right Age for Retirement Planning and How to Go About It

How Does NPS Work?

Here's are Advantages of Pension Schemes and Retirement Plans

Retiring soon? Here’s why buying annuity plans may make sense

Is an Annuity a Good Investment Option?

Is it possible to live a financially independent life, even after you retire?

How To Calculate The Present Value And Future Value Of Annuities?

ELSS vs ULIP: Which is a Better Investment?

Benefits of Early Retirement Planning in India

What are the 4 Financial Phases of Retirement? How to Budget For Each One?

How To Check EPF Claim Status- The Complete Process

Which are the Best Investment Plans for Indian Senior Citizens in 2022?

Getting Close to Retirement? Six Key Retirement Planning Tips That Can Help You Retire

Inflation: A Key Factor to Consider into Retirement Planning

Importance of Retirement Planning

How should one decide on fund allocation within NPS?

Retirement Planning at 50? You Are Still Good to Go

Ten Signs That You're Ready to Retire

How Does ULIP Work in India?

Terminologies You Should Understand About Retirement Plans

Why Should Retirement Planning Be on Top of Your Priority List?

Steps to Figure Out How Much Money You Will Need After You Retire

3 Ways to Save Early to Keep Living Out Your Dreams Post Retirement

How to Calculate Your Retirement Corpus?

Turbocharge Your Retirement Savings with Annuities: Unlock Greater Returns

What is the Difference Between EPF, VPF, and PPF? What are Their Tax Benefits?

What are the Rules for Exit From NPS?

Retirement planning with a systematic life insurance plan

Here's Benefits of Post Retirement Investment Options

How to Save for Retirement With Retirement Investment Plans?

Reasons you should Buy a Retirement & Pension Plan

What is a Defined Benefit Plan and How it Works?

Retirement Planning Guide: These 5 Steps Will Help You Towards a Safe, Secure and Fun Retirement

How to Maximize Your Retirement Savings with a Pension Scheme in India

How Do Annuity Options Work In NPS

Understanding Annuity Plans

Early Retirement Planning Tips

14 Tips to Ensure Successful Retirement Planning

What is the Minimum Lock-in Period for ULIP?

How to Win at Retirement Savings?

Important Questions To Ask Yourself Before Choosing A Good Retirement Plan

Plan Your Retirement in India - Retirement Calculator

Retirement Planning: Use our Retirement Calculator to Plan Ahead

Annuity Plan | How to Choose the Right Annuity Plan | Kotak Life

Know the Pros and Cons of Retirement Annuities

Types of Retirement Plans

Tips to invest your voluntary retirement scheme money

Which Pension Plan Suits You best?

Do Pension Plans Allow Any Death Benefits?

How to Protect Your Retirement Account from Hackers

Importance of financial Planning for Retirement

Embracing the FIRE Movement: Financial Independence and Early Retirement

Top 3 Reasons Why You Should Start Retirement Planning Early

Top Investment Options for Retirement Planning

Types of Annuity Plan | Annuity Definition - Meaning & Key Benefits

7 Secrets that can Make Your Post-Retirement Phase Prosperous

Mastering the 30:30:30:10 Rule: A Guide to Effective Retirement Planning

Here's Retirement Planning Guide for Working Men & Women

Which Is Better: ULIP or SIP?

Long-Term Investing: Boost Retirement Income with an Income Booster

Why is it Good to Have a Retirement Plan Before Your Marriage?

Guide to Long Term Investment

What Are Retirement Pension Plans?

What Is A 401(k) Retirement Plan?: A Beginner's Guide

Benefits of Annuity Plan Investment

What is a Retirement Plan - What are its Features?

15 Passive Income Ideas for Seniors to Boost Retirement Income

Mistakes You Must Avoid While Planning Retirement

Benefits of Early Retirement Planning

Retirement and Pension Plans in India- What are Your Options?

10 Steps to Figure Out How Much Money You Will Need For Your Post Retirement Plans

NPS for Housewife

What Are Mortality Charges In ULIP?

Different Types of Retirement Schemes