ULIPs carry market-linked risks but offer fund-switching flexibility based on your risk appetite.
Unlike direct equity shares, ULIPs provide a diversified investment approach.
Risk in ULIPs is typically lower than in standalone equity investments due to balanced fund options.
ULIPs are ideal for long-term wealth creation with risk management options.
People who are solely dependent on their income for their well-being are more likely to face a financial crisis in the case of an unfortunate event. You can generate wealth and live a peaceful life through financial planning. All you have to do is put some money in an investment channel that ensures the financial security of your family while keeping your financial needs in mind.
So if you want to grow your wealth within a certain period, then a savings investment is the best option for you. However, to initiate this, you first need to choose the right investment option. Though there are numerous investment channels available in the market, if you are a beginner, then it's good to invest in a risk-averse option.
ULIP, also known as a Unit Linked Insurance Plan, is a market-linked investment product that allows you to invest money across multiple asset classes. As compared to other traditional life insurance plans, ULIP is different as it is linked to the risk factor. This savings-cum-protection plan is considered the best investment option among investors as it helps you to maximise your savings by investing money in multiple investment funds.
Although before investing in a ULIP plan, you need to understand that these funds are based on stock market investment. Therefore, they are prone to risks which could affect the return on investment with the market fluctuation.
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The good part is that you get to choose from different types of funds and switch between them as per your needs. You can just assign the amount of your savings to these funds as per your risk appetite. The types of investment funds include - debt funds, equity funds, and balanced funds, among others.
If you are reluctant to take risks, then you can invest in debt funds as they involve less risk. On the other hand, equity funds are liquid in nature. Equity Funds or growth funds are ideal for generating long-term returns. So if you are ready to take risks, then investing in equity funds can be a great option as it will help you get good returns when the market performs well. Equity funds usually deal with company shares and have a good growth rate, and are riskier than other asset classes.
Although before investing in any of these shares, you need to evaluate certain things. The allocation of equity/debt funds varies across companies. Also, you have the right to choose your fund as per your risk appetite. And the return you get from the investment depends majorly on the type of fund you choose.
ULIPs also provide you with the flexibility to choose and switch funds between debt and equity for no or little extra cost. If the market is performing badly, you can invest in debt funds, but if the market is performing well, then you can switch from debt funds to equity funds.
On the whole, the risk factor in case of ULIP investment depends totally on the market conditions. Therefore, you need to be updated on the current market scenarios so that you are well aware of the trends and can switch funds accordingly.
Let’s now directly address the question: Is the risk involved in ULIPs the same as equity shares? Not quite. Here's why:
Criteria | ULIPs | Equity Shares |
|---|---|---|
Risk Exposure | Controlled by choice of fund | Fully exposed to market volatility |
Diversification | In-built through fund managers | Depends on investor's portfolio choices |
Insurance Cover | Yes (life cover included) | No insurance component |
Fund Switching | Available | Not applicable |
Regulation & Structure | Regulated by IRDAI, structured and goal-based | Regulated by SEBI, purely market-driven |
ULIP maturity benefits are taxed at 10% as LTCG if the annual premium is above ₹2.5 lakh, but death proceeds remain tax-free.
Source: India Today
Planning to pick a ULIP plan? Consider the following points for a wise choice:
Your investment horizon: ULIPs work best for long-term goals (5–10 years).
Your risk appetite: Conservative? Stick to debt or balanced funds.
Charges involved: ULIPs have fund management, premium allocation, and mortality charges. Review them before investing.
Fund performance: Monitor it regularly and switch based on market trends.
While ULIPs do carry market-linked risks, especially when you choose to invest in equity funds, the flexibility they offer makes them different from direct equity shares. You get the dual advantage of insurance and investment. Plus, you also get the freedom to switch between funds based on market performance and personal risk appetite.
With options like Canara HSBC Life Insurance’s top-selling ULIP plans, the investment experience becomes even more rewarding and tailored. Our Guaranteed Assured Income Plans offer:
3 plan options to suit different goals
Life cover plus guaranteed benefits
Return of total premiums at maturity
Early income payouts from the 2nd policy year
Further, the iSelect Guaranteed Future Plus by Canara HSBC Life Insurance ensures:
4 plan options for varied life stages
Life cover along with guaranteed benefits
Accidental death benefit
Premium protection cover
If you're looking for a balanced investment vehicle that grows wealth and secures your future, ULIPs from Canara HSBC Life Insurance could be a wise choice. Start today!
Canara HSBC Life Insurance offers online ULIP plans that blend life insurance protection with investment growth, helping you build wealth while securing your family's future.
