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5 Differences Between a ULIP and an Income Plan

  6/22/23 9:09 AM

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  6/22/23 9:09 AM   |

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Life insurance companies have introduced product solutions that offer savings and investment options apart from plain vanilla insurance benefits. Savings and insurance plans with life cover are the best ways to acquire a comprehensive solution for all your financial needs.  

ULIPs (Unit Linked Insurance Plans) and Guaranteed Income Plans are two main products in this regard.

The best ULIP plans in India offer attractive market-linked returns, along with life cover to safeguard your family’s future. Guaranteed income plans, on the other hand, are popular for assured and regular returns on investments coupled with life cover benefit.

Both products are conventionally popular savings products in India due to their provision for wealth creation.

Let us look at five (5) differences between the ULIPs and Income Plans:

  • A ULIP plan is a type of endowment plan wherein one portion of the premium is invested in market-linked avenues , and the other portion isutilized for offering a life cover .

The income plan is a guaranteed return insurance plan where the product provides guaranteed returns in the form of regular monthly income and a life cover.

  • In a ULIP policy, the money is invested in equity funds, debt funds or hybrid funds. Hence, ULIP returns are based on market conditions and price fluctuations.

In a guaranteed return income plan, the funds are invested in non-market-linked zero-risk avenues. As a result, the return is guaranteed and determined at the beginning of the plan. 

  • The concept of ULIP focuses on long term investments. It has a five-year lock-in period. Partial withdrawal is applicable after that which ensures liquidity and allows you to withdraw money for any financial emergencies. ULIP pension plan is an ideal option for people planning for long term commitments after their retirement.

The guaranteed return is provided as regular monthly income for the specified income period starting from the maturity date in the Income Plan. It also provides long term benefits, however differs in the pay-out mode. 

  •  ULIP plan provides the flexibility to switch between the funds as and when desired during the policy term and hence, considered safe. If you have invested in an equity fund, you can switch to a debt fund to secure your investment when the market is volatile. In that way, you make the policy the best ULIP plan for your needs.

In an Income Plan, the investment avenues related to the guaranteed returns are decided at the beginning of the policy term. 

  • ULIP policy is relatively transparent. The information on the invested fund, the price value, and the market movement will be updated to you regularly.

In an Income Plan, there is no such transparency in the proceedings. The premium is paid regularly, and guaranteed returns incur when the policy matures.

The ULIP plans of Edelweiss Life are affordable plans with small investment amounts and offer extensive benefits. A ULIP plan is the best way to start investing in market-linked funds, along with getting the benefit of life cover.

Income Plans are perfect for low-risk policyholders who are looking for an assured return on investments that supplement their primary income.

For more information on our life insurance products, get in touch with our experts today!


Siddhant Dubey - Writer & Photographer

Siddhant works as a freelance content writer who is interested in a wide range of spheres from photography and personal finance to cooking. He is also an aspiring photographer striving to showcase life around him through his vision. 

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