Looking for a smart way to combine wealth creation with tax-saving benefits? ULIP plans (Unit Linked Insurance Plans) can be a powerful solution. They not only provide life insurance coverage but also offer the opportunity to invest in equity, debt, or balanced funds — all while qualifying for tax deductions.
In this guide, we’ll break down the top ULIP plans in India for 2025, explain how they work, and help you choose the right one for long-term savings and tax planning.
What Is a ULIP?
A Unit Linked Insurance Plan (ULIP) is a dual-benefit product that combines investment and insurance. Part of the premium goes toward life insurance, and the rest is invested in market-linked funds of your choice — equity, debt, or hybrid.
Key Benefits of ULIPs:
| Feature | Benefit |
|---|---|
| Tax Deductions | Up to ₹1.5 lakh under Section 80C |
| Tax-Free Maturity | Under Section 10(10D), if annual premium ≤ ₹2.5 lakh (as per rules) |
| Life Insurance Cover | Provides financial security to your family |
| Investment Growth | Equity/debt fund options with long-term compounding |
| Goal-based Planning | Ideal for child education, retirement, or wealth creation |
Top 7 Best ULIP Plans in India for Tax Saving (2025)
Here are the best-performing and most trusted ULIP plans for 2025:
| ULIP Plan | Insurer | Lock-in Period | Fund Options | Key Benefits |
|---|---|---|---|---|
| HDFC Life Click 2 Wealth | HDFC Life | 5 years | Equity, Debt, Balanced | Zero premium allocation charge, wealth boosters |
| ICICI Pru Signature | ICICI Prudential | 5 years | Equity, Debt, Hybrid | Multiple portfolio strategies, loyalty additions |
| Max Life Online Savings Plan | Max Life Insurance | 5 years | 6+ Fund Options | Flexible fund switching, tax benefits |
| Bajaj Allianz Future Gain | Bajaj Allianz | 5 years | 7 Fund Choices | High fund value addition, low charges |
| Tata AIA Fortune Pro | Tata AIA | 5 years | Multi-fund strategy | Dynamic asset allocation, loyalty additions |
| SBI Life Smart Wealth Assure | SBI Life Insurance | 5 years | 9 ULIP Funds | Single premium ULIP, government-owned trust |
| Aditya Birla Sun Life Wealth Aspire | ABSLI | 5 years | 13 Fund Options | Premium boosters, return of mortality charge |
How ULIPs Help You Save Tax
1. Section 80C Deduction
You can claim up to ₹1.5 lakh of your annual premium as a deduction under Section 80C of the Income Tax Act.
2. Tax-Free Maturity under Section 10(10D)
If:
- Annual premium ≤ ₹2.5 lakh
- Policy held for at least 5 years
Then maturity proceeds are completely tax-free.
⚠️ Note: If your annual premium exceeds ₹2.5 lakh, the maturity amount may be taxed as capital gains under the new rules introduced in Budget 2021.
Who Should Invest in ULIPs?
ULIPs are ideal for individuals who want a long-term investment plan with tax benefits, particularly:
- Young professionals starting financial planning
- Parents saving for children’s education
- Salaried individuals looking to claim deductions under 80C
- Risk-tolerant investors seeking equity-linked growth with insurance
Performance Snapshot of Top ULIP Funds (2024 Data)
| ULIP Fund (Equity) | 1-Year Return | 5-Year CAGR | Fund Manager |
|---|---|---|---|
| HDFC Life Opportunity Fund | 17.5% | 12.3% | Vinit Sambre |
| ICICI Pru Maximiser Fund V | 18.2% | 11.9% | Sankaran Naren |
| Max Life High Growth Fund | 19.1% | 13.0% | Dhaval Kapadia |
| Bajaj Allianz Pure Stock Fund | 21.4% | 14.7% | Sampath Reddy |
| SBI Life Equity Optimizer Fund | 15.8% | 11.2% | SBI Mutual Fund Team |
📊 Past performance is not guaranteed in future. ULIP funds are subject to market risk.
ULIP Charges to Consider
Although newer ULIP plans have become more cost-effective, be aware of these charges:
| Charge Type | Description |
|---|---|
| Premium Allocation Charges | Deducted upfront from each premium (0–2%) |
| Fund Management Charges | Charged for fund maintenance (up to 1.35% p.a.) |
| Mortality Charges | Based on age and coverage amount |
| Policy Administration Fee | Flat or % based monthly fee |
| Switching Charges | Some plans charge after a fixed number of free switches |
| Discontinuation/Surrender Charges | Applicable if policy is terminated early |
✅ Tip: Choose plans with zero allocation and low admin fees to maximize returns.
ULIP vs ELSS: Which Is Better for Tax Saving?
| Feature | ULIP | ELSS (Equity Linked Savings Scheme) |
|---|---|---|
| Tax Benefit (80C) | Up to ₹1.5 lakh | Up to ₹1.5 lakh |
| Lock-in Period | 5 years | 3 years |
| Life Cover | Yes (insurance included) | No |
| Fund Choice | Equity, Debt, Balanced | Only Equity |
| Charges | Multiple charges (can be high) | 1-2% expense ratio |
| Returns | Market-linked | Market-linked |
| Ideal For | Long-term investors who want insurance + investment | Pure equity investors |
Verdict: Choose ULIP if you want insurance + investment + tax-saving in one plan. Prefer ELSS for shorter lock-in and pure investment focus.
How to Choose the Right ULIP Plan?
Here’s what to keep in mind when selecting a ULIP for tax saving:
✅ Financial Goal Alignment
Choose ULIPs that match your goal: retirement, education, or wealth building.
✅ Low Charges
Avoid plans with high premium allocation or administration charges.
✅ Fund Flexibility
Ensure the plan allows free fund switches between equity and debt as your risk profile evolves.
✅ Strong Fund Performance
Review historical fund performance (3–5 years) and fund manager credentials.
✅ Tax Rule Compliance
Ensure your annual premium is ≤ ₹2.5 lakh to qualify for tax-free maturity under Section 10(10D).
Sample Illustration: ULIP for 30-Year-Old Investor
| Details | Value |
|---|---|
| Annual Premium | ₹1,00,000 |
| Investment Horizon | 15 years |
| Fund Chosen | Equity Growth Fund |
| Average Expected Return (CAGR) | 10% |
| Sum Assured | ₹10,00,000 |
| Total Invested | ₹15,00,000 |
| Projected Maturity Amount | ₹29,00,000 (approx) |
| Tax Benefits Claimed (80C) | ₹1,50,000/year × 15 = ₹22,50,000 |
| Maturity Tax | 0 (if under ₹2.5 lakh/year premium) |
How to Buy ULIPs Online in India (2025)
Step-by-Step Process:
- Compare Plans Online
Use aggregator sites like Policybazaar, Coverfox, or direct insurer websites. - Calculate Premiums
Use ULIP calculators to estimate returns and coverage. - Choose Fund Allocation
Decide the equity vs debt mix based on your age and risk tolerance. - Fill KYC Details
Provide PAN, Aadhaar, income documents, etc. - Pay Premium & Policy Issuance
Policy document and login credentials will be emailed.
🧠 Pro Tip: Always read the benefit illustration and terms before investing.
Final Thoughts
ULIPs in 2025 are smarter, leaner, and more investor-friendly than ever before. They offer a rare combination of tax savings, investment flexibility, and life insurance protection, making them an ideal choice for long-term financial planning.
If you’re looking for a tax-saving strategy that also builds wealth over time, choosing the right ULIP plan could set you on the path to financial independence.
Frequently Asked Questions (FAQs)
Q1. Are ULIP returns guaranteed?
No. ULIPs are market-linked and returns depend on the performance of the fund.
Q2. Is it possible to withdraw money before maturity?
Partial withdrawals are allowed after 5 years, subject to terms.
Q3. Can I switch between funds anytime?
Most ULIPs offer 4–6 free switches per year; additional switches may be chargeable.
Q4. What happens if I stop paying the premium?
If you stop before 5 years, the fund value is transferred to a discontinued fund with lower returns.