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Comparing ULIP returns to Mutual Funds

If you think Unit Linked Insurance Policies give equivalent returns to Mutual Funds, think again.

I compared the returns of the same management – Prudential ICICI Mutual Fund, and ICICI Prudential Insurance policies and found that over the last three years, their growth mutual fund has given better returns than the “MAXIMISER” option of their ULIPs.

I compared the NAVs on 1st August of 2004, 2005, and 2006. How much they grew over the previous year is given below

Pru-ICICI Growth Fund: 39% (05-06) and 61% (04-05)
ICICI Pru ULIP Lifetime Maximiser plans: 35% (05-06) and 44% (04-05)

Note also that ULIPs generally remove your units as their Annual management charge and monthly charges. Mutual funds account for those in the NAV itself. Therefore, for the same dates, your real return on the ULIP would be lower than the figures mentioned, but on the Mutual funds would be the same as above.

  • Anonymous says:

    >Hi Deepak
    Why no posts in a long time….Ur views are very intersting to novice investors like me…I check ur blog everyday…Its disappointing not to see any posts…

  • Deepak Shenoy says:

    >Sorry, have been on leave for a week or so, and have had a work pile up to deal with!

    Will post more today.

  • nag says:

    >Hi Deepak,
    I paid for ULIP each month 2000/- ( 2 Thousand) so total 10 thousand. pls suggest me is it better to stop now or stop after 3 years.
    option 1 : If I stop now only 10 thousand I will lost.

    option 2 : After 3 years if I draw except 1year primium I can draw rest. So 24000 will be left. If I stop after 3 years 30% tax benefit (24K*30%=7.2K), SO loss is 24000(12months*2K) -7.2k= Rs. 16,800.
    After 3 year if I stop some amount in 1st year primium like 50% I will get or nothing.
    Plese suggest now which option is good 1 or 2 with analysis pls.
    Very less time pls reply to

    It is urgent pls reply me at ASAP.


  • nag says:

    Anybody pls repl on my before post.
    If you are in bangalore,pls give me you mobile number, I will call you.

    Mobile: 9980805090.

  • Deepak Shenoy says:

    >nag: Which ULIP? If you want to close this ULIP after three years then you will end up losing the amount you mention: Rs. 16,800.

    If you want to continue for say five or six years, your losses may be lesser.

    I’d say stop right now if you were looking at a 3 year term only. If you are thinking of 10-20 years, maybe this policy is worth it.

  • Anonymous says:


    Good Evening…

    This is Ravikumar,I am single. My age is 27.
    I can invest 5000 for month.

    I need best retirement solution.

    I have three options. can you please let me know which is best option for retirement…
    1.Investing in mutual funds for long term.
    2.Investing in Pension plan.
    3.Investing in ulips.

    Can you please explain in detail, which is best option and why?
    If there is any other soulution…Please suggest me…

  • Anonymous says:

    >@Ravikumar take my advice i work in dis sector mutual funds are a lot better than any other investment product specially if u invest every month ie sip mode and within a period of three years u'll start seeing the result