ULIP vs Term + MF Calculator

Compare ULIP vs buying term insurance + mutual fund separately. See the wealth difference over 10, 15, and 20 years with actual charges and returns.

ULIP vs Term + MF Calculator

Equal premium outflow — ULIP vs buying term + investing the difference

Annual ULIP premium Rs 50,000
Rs 12KRs 5L
Rs
Term insurance premium Rs 12,000

Annual cost for equivalent life cover under a pure term plan

Rs 3KRs 50K
Rs
Policy term 20 years
5 yr30 yr
yrs
MF expected return 12%
6%20%
%
ULIP gross return 10%
6%18%
%
ULIP total charges p.a. 2.5%
1%5%
%
Term + MF corpus
---
at maturity
ULIP corpus
---
after charges
You gain extra
---
with term + MF
Annual premium outflow---
Term insurance cost---
Amount invested in MF---
Term + MF corpus---
ULIP corpus (net of charges)---
Extra wealth with term + MF---
ULIP vs Term + MF corpus
Term + MF: ---
ULIP: ---

Past returns not guaranteed. MF returns are pre-tax estimates. ULIP charges vary by insurer and plan. Compare actual policy documents before deciding.

Corpus growth — ULIP vs Term + MF over time
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ThriftRupee Insight

Buy term, invest the rest — this is one of personal finance's most validated rules. A Rs 20,000/year ULIP for 20 years on Rs 50 lakh cover has charges of 2.5–3.5% annually. A Rs 7,000/year term policy gives the same cover; the remaining Rs 13,000/month invested in an index fund at 12% grows to Rs 1.2 crore — vs Rs 65 lakh from the ULIP. After lock-in and surrender charges, ULIPs rarely win.

ULIP vs Term + Mutual Fund — The Definitive Comparison

ULIPs combine insurance with investment in a single product, while "buy term, invest the rest" separates them for maximum efficiency. The key drag on ULIP returns is the combined charge structure — premium allocation charges, policy administration charges, mortality charges, and fund management charges — which typically total 2.5–4% annually in the early years. This calculator shows the actual rupee impact of this charge difference over your investment horizon.

Frequently asked questions

Is ULIP better than term insurance + mutual fund?▼
For most investors, term + mutual fund (MF) is superior. ULIPs have high charges in early years (premium allocation, policy admin, mortality, fund management totalling 3–4% vs 0.1–0.5% for index funds), a 5-year lock-in, and surrender penalties. The "buy term + invest rest" strategy consistently outperforms ULIPs over 15–20 years when compared on equal premium outflow.
When does ULIP make sense?▼
ULIPs can make sense for high-income investors seeking tax-free maturity proceeds (ULIP maturity is tax-free if annual premium ≤ Rs 2.5 lakh; MF LTCG above Rs 1.25 lakh is taxed at 12.5%). For those in the 30% tax bracket with large investable surplus, the tax differential can sometimes tilt the math towards ULIP. Always compare post-tax returns.
What are ULIP charges?▼
ULIP charges include: Premium Allocation Charge (3–5% in year 1, reducing over time), Policy Administration Charge (Rs 1,000–2,000/year), Mortality Charge (cost of insurance, increases with age), Fund Management Charge (1.35% per year max), Surrender Charge (applies in first 5 years). Modern ULIPs have lower charges but still exceed direct MF costs.

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