Are all newer ULIPs better than mutual funds or do I need to pick specific ones?

You absolutely cannot just walk into a bank and buy the first ULIP they offer you because product selection is still incredibly critical. While the regulator cleaned up the worst abuses in the industry there is still a massive difference between a top-tier ULIP and an average one. We can see this clearly when we run the numbers on a ₹1 Lakh annual investment over 10 years at a 12% return.

A direct mutual fund will leave you with roughly ₹18.15 Lakhs after paying the 12.5% LTCG tax. If you pick a highly optimized plan like HDFC Click 2 Wealth you end up with ₹18.24 Lakhs because they refund your mortality charges and credit a 1% bonus early on. ICICI Pru Signature also beats the direct mutual fund at ₹18.18 Lakhs by refunding charges and adding a wealth booster at maturity.

But if you look at a plan like Bajaj Allianz Future Gain the story changes slightly. This plan does not offer those charge refunds or wealth boosters at the end. Even with the zero tax advantage it finishes at ₹17.86 Lakhs which is lower than the direct mutual fund by about Rs30,000.

It still comfortably beats a regular mutual fund but it shows why you have to read the policy documents carefully. You also take on fund manager risk because your returns depend entirely on how well the insurance company manages that specific equity fund. The tax benefits and built-in life cover make modern ULIPs attractive for long-term goals.

But you have to do your homework and specifically seek out the low-cost options that refund mortality charges and offer maturity boosters.

Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.