Earn interest up to 8.60% p.a. by investing in a Bajaj Finance Fixed Deposit | Stable Rating - CRISIL’s FAAA & ICRA’s MAAA Invest Now


Every individual plans investments based on their unique financial goals. Depending on your personal needs, you may invest to earn good returns, secure your future, or create wealth to help you fulfil your dreams. Irrespective of your goals, there are two types of insurance plans that you can use: Unit-Linked Insurance Plans or Traditional Plans. Both come with their own benefits, hence, it is imperative to understand the difference between ULIPs and traditional plans. This will help you make an informed decision.

Let’s compare ULIP vs traditional plan, so you can identify the right plan for yourself.

Comparison Between ULIPs and Traditional Plans

The below table will help you determine the entire ULIP vs traditional plan debate better.



Traditional Plans

Type of scheme

Insurance-cum-investment plan

Purely an insurance plan


To offer insurance as well as long-term investment benefits

To offer fixed return for a long period

Best suited for

Someone who wants a life cover along with good returns in the long run

Someone who wants security against unforeseen threats as well as fixed returns

Fund Switching


Not allowed

Lock-in Period

5 years mandatorily

Until maturity

Tax Benefits

Tax exemption available under Section 80C of the Income Tax Act

Tax exemption available under Section 80C of the Income Tax Act

Regulatory Body




Market-linked returns

Fixed returns


Mortality charges, fund management charges, partial-withdrawal charges, insurance premium allocation charges, fund switching and administrative charges, and surrender charges are levied

Mortality charges and premium allocation charges are levied

Premium Allocation

The premium amount is divided between life cover and investments

The premium amount is divided between insurance cover and debt funds

Systematic Investment Plan




A highly flexible plan

Not a flexible plan


No security

Highly secure


Now that you know what is the difference between ULIP and traditional plans, you can make an informed decision based on your personal financial goals. While traditional plans are highly secure, ULIPs offer higher returns. As with any investment opportunity, make sure you do a little research before you decide on the best ULIP plans or endowment plans to fulfil your needs and requirements.

FAQs on ULIP vs Traditional Plan

The most basic difference between a ULIP and a traditional plan is that ULIP is flexible in nature, whereas the latter isn’t. Additionally, ULIP offers higher returns as compared to traditional plans.

Yes, ULIPs offer tax benefits under Section 80C of the Income Tax Act.

Yes, a traditional plan provides tax benefits under Section 80C of the Income Tax Act.

Yes, ULIP is a great tax-saving investment option for someone who wants the benefits of both insurance and investment.

Yes, since only a part of your premium goes for insurance in ULIPs, a traditional insurance plan offers a higher insurance amount.

Happy Customers of Bajaj Markets

Valene Gomes
Getting a loan to take care of my wedding and relieving my parents to enjoy the occasion was the best decision I ever made. Easy-to-apply, amazing interest rate and quick disbursal, what more can one ask for!
Vinamra Jain
I am passionate about the vehicle I drive. I want to protect it with the best available option. What amazed me was the full transparency, quick quotes and the attractive discount on the premium while choosing the annual payment option!
Shehnaz Patel
My husband and I will finally move into our own house this Diwali. All thanks to Bajaj Markets, with competitive interest rates, minimal processing fees and easy to repay EMIs, our dream saw the light of reality in no time!
Brijesh Mishra
Kids grow up fast and to fulfill their dream trip to Disneyland I had everything but instant funds. With no collateral or guarantor required and a hassle-free processing, I gifted my family a memorable trip to Orlando with just a click!
Chandni Arora
The best way to start looking for health insurance is to do a close study of the coverage needs and checking the insurance company's claim ratio. No unnecessary jargons, easy to apply claims process and choice of premia!
Anurag Pandit
I bought my first iPhone using my Bajaj Finserv EMI Network Card. Zero downpayment with a No cost EMI on Bajaj Finserv EMI store just made my day!


Download App
Credit Score