What Are Market-Linked Returns in ULIPs? ULIP Returns Guide

Written by : Knowledge Center Team

2025-11-03

1261 Views

5 minutes read

Locate branch

Resume journey

Pay Premium

Live Life More Confidently

Get best insurance from our experts

Name is required Name should be Valid

Mobile Number is required Mobile Number should be Valid

Email is required Email should be Valid

DOB is required DOB should be Valid

Annual Income*

< 3 3-5 5-7 7-10 > 10

Annual Income is required

I agree that even if my contact number is registered with NDNC / NCPR, I would still want the Company to contact me on the given number and email id for the clarifications/product information sought by me and agree that I have read and understood the Privacy Policy and agree to abide by the same.

Please tick to proceed further.

Thank you for your interest in our product. Our financial expert will connect with you shortly to help you choose the best plan.

Are you comparing different plans of online life insurance and hoping you could possibly get more returns from a plan? Are you looking to invest in a plan that can benefit from market movements and offer healthy returns? Are you seeking flexibility to manage your funds? If yes, read on to understand the benefits of investing in a Unit Linked Insurance Plan (ULIP).

ULIP is an integrated plan that provides dual benefits of insurance cover and investment. Unlike a pure life insurance policy that merely provides insurance cover, a ULIP plan provides an opportunity to earn market-linked returns. A portion of the premium in such a plan is invested in market-linked funds.

Key Takeaways

ULIP offers both insurance cover and market-linked investment.
These are ideal for long-term goals like education, house purchase, and retirement.
ULIPs offer flexibility to switch between equity and debt funds as per market trends or risk appetite.
These plans gain popularity for transparent charges with no hidden costs.
You can enjoy tax benefits under Sections 80C and 10(10D)

Market-Linked Returns

The best ULIP plans aim at creating wealth in the long term by maximising the returns on investment. When you make an investment in a ULIP plan, the insurance company invests a portion of the premium in shares and bonds, while the balance amount is utilised to provide an insurance cover. As fund managers in the insurance company use their understanding of the market to maximise returns on investment, the investor does not have to worry about tracking the investments. These fund managers may invest in different market instruments, including debt and equity, in varying proportions.

As insurance companies offer different types of insurance plans, choosing the best ULIP plan to meet your specific investment needs and long-term goals can be a challenging task. You must assess factors such as risk appetite, long-term goals and your own understanding of the market. Once you have assessed your specific requirements and financial goals, you must compare different types of ULIP plans in the market. It may be a good idea at this stage to investigate the nature and performance of the funds that a ULIP invests in to estimate the returns on investment. Canara HSBC Life Insurance offers some of the best ULIP plans that can help achieve long-term goals for your family.

How is ULIP Ideal for Long-Term Investment?

Before you decide to buy life insurance online, consider the several advantages of investing in a ULIP plan. ULIP is an ideal plan for long-term investment. Investing in a ULIP can be a smart decision for an investor looking to capitalise on healthy market returns. Despite the market risk involved, investing in a ULIP is considered a safe and secure investment. These plans can help fulfil personal goals such as funding your child’s higher education, buying a house, and retirement planning. With the insurance cover, these plans offer security in case of the untimely death of the policyholder.

The performance of ULIP plans is impacted by the changing dynamics of the capital market. As market dynamics can change over a period, the performance of investor funds can also change. Thus, as returns may not be guaranteed, investment in a ULIP plan is not free from risks. The investment risk in the investment portfolio is borne by the policyholder.

Flexibility and Transparency: Flexibility is a key advantage of ULIPs. Investors can switch between debt and equity funds based on their risk profile and market trends. All charges are disclosed upfront, such as:
1. Premium allocation charges (deducted from the premium in early years)
2. Fund management charges (for managing funds)
3. Mortality charges (depend on age and cover amount)
4. Policy administration charges (fixed rate)

This transparency ensures no hidden charges for investors.

Tax Advantage of ULIP Plans: The second significant benefit of ULIPs is their tax efficacy. Premiums paid on ULIPs qualify for deduction under Section 80C of the Income Tax Act, up to ₹1.5 lakh per year. Moreover, the maturity benefits are tax-exempt under Section 10(10D), according to current tax rates. Thus, ULIPs are popular among individuals seeking the growth of their investments and tax benefits.

Disclaimer: Tax benefits are subject to change in tax laws. Please consult your tax advisor.

How to Choose the Best ULIP Plan for You?

Selecting the appropriate ULIP plan is a daunting task, based on the fact that there happen to be a number of schemes available. However, by adopting a step-by-step strategy, you will make an intelligent decision that suits your long-term financial aspirations.

Be Specific About Your Goals: Before you invest in any ULIP, consider why you are investing. Is it for your child's education, retirement, or wealth creation? If you know your purpose, you can decide on the right fund and policy duration.
Assess your Risk Appetite: ULIPs offer various kinds of funds such as equity, debt, and balanced funds. Equity funds invest heavily in stocks and are for individuals who can tolerate high risk and desire more returns. Debt funds are secure as they invest in government securities and bonds, providing stable but lower returns. Balanced funds offer a balance of both. Knowing your risk profile will enable you to select the appropriate fund combination.
Compare other Plans and Options: There are different ULIP plans offered by insurance companies, and each plan has different features, charges, and fund options. Plans must be compared on premium allocation charges, fund management charges, mortality charges, policy administration charges, switching facilities, and fund performance history. Select plans with transparent charges and consistent fund performance for a period of at least 3-5 years.
Look at the Flexibility Provided: Opt for a ULIP plan that offers you the facility to switch funds several times a year at low costs. This allows you to rebalance the portfolio to reduce risk or achieve maximum returns as market conditions evolve.
Review the Insurer’s Credibility: ULIPs are long-term investments. So, look for the claim settlement ratio and the financial health of the insurer. Take Canara HSBC Life Insurance, for instance. It is a trustworthy name with good fund management and a high claim settlement ratio, and hence a good bet for your long-term investment.
Appreciate Tax Implications: Ensure the plan offers tax benefits under Section 80C and maturity benefits under Section 10(10D). Also, inform yourself about the current tax norms, as the taxation policies of ULIP can be amended in the future. By doing so, you can choose a ULIP plan according to your money objectives, tolerance for risk, and market prospects. Keep in mind that a good ULIP not only gives you life coverage but also helps you build wealth over time.

Final Thoughts

ULIP plans are ideal for long-term investment. Along with a life insurance cover, these plans invest the policyholder’s money in different market-linked funds to maximise the returns on investment. Thus, the investor has a good chance of benefiting from market movements and earning healthy returns to meet financial goals. The flexibility to switch between debt and equity funds has made ULIP plans popular with investors who can use their understanding of the market to switch their investment portfolio.

Canara HSBC Life Insurance offers multiple options to invest your savings. There are multiple plans suited for wealth creation to meet your long term financial goals.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

Absolute Returns in ULIPs: Meaning, Benefits & How They Work

What Are Mortality Charges in ULIPs?

Unit Linked Insurance Plans - Top Selling Plans

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.