Wednesday, May 22, 2024


ULIPs vs PPF vs MF: A Comparative Analysis



Investments are crucial as they can help investors meet their financial goals. However, as there are many investment options, it can become difficult for an investor to select the right one.

Some of the best investment options are- ULIPs, PPFs, and mutual funds. Investors should assess their financial requirements before selecting an option.

But before comparing these options, it’s essential to understand them.

What are ULIPs?

Unit-linked insurance plan (ULIP) is a unique product that offers the benefit of investment and insurance. A part of the premium is used to invest in different investments like equity and debt, and the remaining amount goes towards life cover. Thus, a ULIP plan offers financial protection to the policyholder’s family. It also allows an investor to build a financial corpus.

What are Mutual Funds?

Mutual funds are one of the most popular investment instruments. A mutual fund scheme collects funds from investors and invests the money in various securities like stocks, money market instruments, bonds, etc.

What is PPF?

Public Provident Fund (PPF) is a scheme launched by the government. It offers a fixed interest rate. The interest rate is determined by the government.

Let’s analyse these options based on different factors-

Investment Objective

  • Primarily, ULIPs are insurance products that can provide good returns. It is right for investors who want one product that offers insurance and investment benefits.
  • If an investor wants to grow his/her wealth substantially, then mutual funds can be the right option for him/her.
  • Generally, investors opt for PPF to build a financial corpus for retirement.

Lock-In Period

  • ULIPs have a lock-in period of 5 years.
  • Generally, there is no lock-in period for mutual funds.
  • The lock-in period for PPF is 15 years.


  • A ULIP can provide good returns, but its performance depends on the market.
  • The returns from mutual funds depend on the type of mutual fund chosen by the investor. For instance, equity mutual funds can provide higher returns, while debt mutual funds tend to offer lower returns.
  • PPF offers fixed returns based on the interest rate determined by the government.


  • There are multiple charges that you’ll have to pay for a ULIP, such as premium allocation charge, fund management charge, etc.
  • You’ll have to pay a charge based on the expense ratio of a mutual fund.
  • Investors must pay a one-time account opening charge of ₹100.

Tax Benefits

  • Under Section 80C, you can avail a tax deduction on the premiums paid to purchase a ULIP. The tax deduction limit is ₹1.5 Lakh.
  • Generally, you can’t avail any tax benefits for investing in mutual funds.
  • Your investment in PPF will be eligible for tax deduction under Section 80C. You can claim up to ₹5 Lakh.

In conclusion, you should choose these investment options based on your requirements. If you want to provide financial protection to your family, then ULIPs are a great option for you. In case you don’t want to take the risk, then PPF is right for you. If you have a high-risk appetite, then you should consider mutual funds.

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