Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term

Protect Your family’s financial future with Kotak e-Term. 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 insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. 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!

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

Kotak e-Invest

Download Brochure


  • Return of Mortality Charges*$
  • Enhanced Protection
  • Multiple Plan Options
  • Zero Premium Allocation Charges
  • Tax Savings^

Ref. No. KLI/22-23/E-BB/521


- A Consumer Education Initiative series by Kotak Life

Similar Articles

Do ULIPs Give Good Returns On Investments?

What Are Superannuation Benefits?

What are Fixed Maturity Plans and Why Should I Invest in Them?

What is Partial Withdrawal in ULIPs?

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

ELSS vs ULIP: Which is a Better Investment?

How Has NPS Performed in Comparison with Other Instruments?

Retirement Planning Guide for Working Men and Women

What are the Rules for Exit From NPS?

Un-Retirement - Are You Ready For It?

Is It Worth Buying ULIP Plans For 10 Years?

Importance of financial Planning for Retirement

Advantages of Pension Schemes and Retirement Plans

What is NAV in ULIP, and How is it calculated?

ULIP: Can You Surrender ULIPs or Withdraw Money from It?

EPF Grievance Management: All You Need to Know

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

What To Do With Your Retirement Accounts During An Employment Lapse?

Retirement Planning for Millennials

Why ULIP Should Be a Part of Your Investment Portfolio?

Single Premium ULIP or a PPF - Which One is Better?

What are the Charges Levied on ULIP?

Benefits of Early Retirement Plans

Retirement Planning - How To Calculate Your Retirement Premium in India?

How Much Corpus Does One Need for Retirement?

5 Retirement Planning Tips for a Financially Controlled Post-Employment Life

What Are Mortality Charges In ULIP?

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

Saving for approaching retirement with retirement insurance

Top Investment Options for Retirement Planning

NPS for Housewife

A Beginner's Guide to Understanding 401k Retirement Plan

Save Early to Keep Living Your Dreams Post Retirement

What are the Instruments Available for Building a Retirement Corpus?

Demystifying the Retirement Planning Process

Are You Planning an Early Retirement? Here's Why Buying Annuity Plan Will Make Sense

What is Premium Redirection in ULIPs Plans | ULIP Insurance Plans | Kotak Life Insurance

ULIP Tax Benefits: यहां निवेश करने पर मिलते हैं 5 बड़े फायदे

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

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

What are the Advantages and Disadvantages of ULIP?

How Does Pension Plans in India Works?

Do Pension Plans Allow any Death Benefits?

Tips to invest your voluntary retirement scheme money

Looking for Ways to Earn Lifetime Income in Retirement? Here Are 6 of the Top Options

यूलिप के 8 शुल्क

Inflation: A Key Factor to Consider into Retirement Planning

Important Questions To Ask Yourself Before Choosing A Good Retirement Plan

Why You Should Invest In An Annuity Plan?

Which Is Better: ULIP or SIP?

Pros and Cons of Retirement Annuities

Retirement Planning: Use our Retirement Calculator to Plan Ahead

Top 6 Flexible Benefits That ULIPs Offer

Difference Between Unit-Linked Insurance Plans and Non-Linked Plans

Ten Signs That You're Ready to Retire

Retirement Planning at 50? You Are Still Good to Go

Meaning of Sum Assured in a ULIP

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

Does Having Both ULIP Plan and Other Health Insurance Plan Make Sense?

Why Should You Invest in NPS?

How To Make Most of Your Money After Retirement?

यूलिप और उनके प्रकार क्या हैं?

Know Why You Should Stay Invested in Your ULIP Plan

How to Build a Tax-Free Pension Income for Retirement?

How Do Annuity Options Work In NPS

Here's What Retirement Would Look Like 30 Years From Now

FAQs on Taxation of ULIPs

How To Keep Your Retirement Accounts from Being Hacked?

How Can ULIPs Help You Plan for Your Child's Future?

5 Steps to Gift a Smart Retirement Plan to Your Parents

Retirement: A New Start to Life!

How should one decide on fund allocation within NPS?

What Happens to ULIP Premiums Paid if the Market Crashes?

5 Reasons Why ULIP Plans are One of The Best Retirement Planning Instruments

Top 6 Reasons Why You Should Get A Pension Plan

5 Notable Investment Options for Retirees

How Quickly is Fund Switch Effected in ULIPs? Is it Done the Same Day or After a Particular Number of Days?

What is a Retirement Plan - What are its Features?

ULIP Plan or Traditional Insurance Plans - Which is better?

Top 4 Mistakes To Avoid While Planning For Your Retirement

Is ULIP a Good Option for People Above 60?

How has ULIP Grown Over the Last 3 years?

Is it Advisable to Withdraw the ULIP Insurance Policy After 5 Years?

Terminologies You Should Understand About Retirement Plans

Calculating a Retirement Corpus that can Support Your Lifestyle

What is Fund Value in ULIP?

Importance of Retirement Planning

Is ULIP a Complex Financial Product?

Invest for your second innings with a guaranteed savings plan

What is the difference between Life Insurance and ULIP?

How can NPS help you save tax?

What Are Retirement Pension Plans?

Why Should You start Retirement Planning as soon as you start a job?

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

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

Who Gets the Benefit After the Maturity of ULIP: The Proposer or The Life Insured?

What is the Estimated Return Percentage on ULIP? Do Investors Get Compound Interest?

Worried About Running Out of Money in Retirement? 4 Tips to Avoid This Crisis

What are the Uses of ULIP?

How To Choose The Right Pension Plan?

5 Reasons to Buy ULIP for a Secured Financial Future

Long Term Investment Guide for Your Retirement

Top 4 Myths About ULIP Investments You Should Know

Is ULIP A Good Investment Option?

5 Common ULIP Myths That You Should Stop Believing

What are the Maturity Benefits in a ULIP Plan: Fund Value Sum Assured or Only Fund Value?

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

Understanding Annuity Plans

How Safe is it to Invest in ULIP plans?

How Can I Achieve My Wealth Goal with ULIP Investment?

Give Your Retirement Savings A Booster-Shot with Annuities

How Does ULIP Work in India?

What Happens If I Stop Paying My ULIP Policy Premium After Paying the First Premium? Will I Still Get The Return?

How to Win at Retirement Savings?

What is a Defined Benefit Plan and How it Works?

What are ULIPs and their Types?

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

The Significance of Number 8,000 in Retirement Planning

What are the things to consider before buying ULIPs?

What are the minimum and maximum investment in ULIP? Would the Whole Amount Insured in The ULIP Insurance be Invested in the Market?

Different Types of Retirement Schemes

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

What are the Chances of Losing all my Money in ULIP and How Much Return Should I Expect?

What is the Death Claim Payable in the Case of ULIP?

Is the ULIP Policy Surrender Value Taxable?

Retirement planning with a systematic life insurance plan

At What Age Should You Start Your Retirement Planning?

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

Which Pension Plan Suits You best?

8 Charges in ULIP That You Must Know

What tax benefits are there on saving for retirement?

Different Types of ULIP Investments in India

How Does NPS Work?

A Quick Guide to Retirement Plans

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

What is Lock-In Period in ULIPs?

Types of Pension Plans for Your Retirement

What is the Minimum Lock-in Period for ULIP?

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

Is it Suggestible to Take a ULIP Plan Linked with a Term Plan?

Benefits of Early Retirement Planning in India

Can I Surrender My ULIP Policy after 2 Years?

Can NRIs Invest in ULIP Plans Offered in India?

Benefits Of Retirement & How Investments Can Help You Enjoy Them

Types of Retirement Plans

Is ULIP Better Than FD?

7 Secrets that can Make Your Post-Retirement Phase Prosperous

Best Insurance Plans for a Guaranteed Monthly Income After Retirement!

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

Are Annuities Great For Early Retirement?

What are the Benefits of ULIP - Explained