# Why ULIPs may not beat term insurance or mutual funds 2026-08-08T00:09:56+00:00 | Business & Economy | Indian Opinion Desk Corroboration: 1 independent outlet Unit Linked Insurance Plans (ULIPs) combine life cover with market-linked investments, but high charges make them less attractive than separate term insurance and mutual funds, The Hans India reports. When a policyholder pays a premium, the insurer first deducts multiple charges before investing the remainder. The premium allocation charge can be up to 12.5% of the annual premium, meaning a Rs 1 lakh premium could see only Rs 95,000 invested initially. Monthly deductions for policy administration (capped at Rs 500) and fund management (capped at 1.35% of fund value) further erode returns. By contrast, a mutual fund invests the entire amount from day one, with only the expense ratio reducing returns gradually. For insurance, a healthy salaried individual can get a Rs 2 crore term plan for an annual premium of Rs 17,000-20,000. A ULIP's life cover is typically only 7-10 times the annual premium, so a Rs 1 lakh premium yields cover of only Rs 7-10 lakh, which may be inadequate for most families. ## Coverage - thehansindia.com Tags: insurance charges, investment, mutual funds, term insurance, ULIP Canonical: https://indianopinion.org/why-ulips-may-not-beat-term-insurance-or-mutual-funds/ License: Summary and commentary (c) Indian Opinion, reusable with attribution. Facts belong to the linked sources. Cite: https://indianopinion.org/why-ulips-may-not-beat-term-insurance-or-mutual-funds/#story-in-brief Review state: restored archive article, accurate at time of publication, not offered to search indexes.