ULIP Calculator: What the Charges Cost You
The fund value of a ULIP after its charges, set against the same money in a mutual fund, using the charges from your own policy's illustration.
₹1 lakh a year for 15 years growing at 10% a year becomes ₹28,65,586 in a ULIP with example charges (5% premium allocation for five years, ₹1,200 a year policy admin, ₹3,000 a year for life cover, 1.35% fund charge), against ₹33,29,464 in a mutual fund charging 0.5% a year: the charges cost ₹4,63,878. Enter your own policy's charges to see yours.
The words on this page, explained simply
New to this? Here is what each term means, in plain English.
- ULIP charges
- The fees a unit-linked plan takes: a cut of the premium (allocation), a fixed admin fee, the cost of the life cover (mortality) and a yearly fund management fee.
- Expense ratio
- The yearly fee a mutual fund takes, as a percentage of your money in it.
- Expected return
- How much you guess your money will grow each year, on average. It is a guess, not a promise: markets rise and fall. Try a low and a high number to see the range of outcomes.
- Compounding
- Earning returns on your earlier returns. ₹1 lakh growing at 10% a year becomes ₹1.1 lakh after a year; the next 10% is earned on ₹1.1 lakh, not ₹1 lakh. Over many years this snowballs, which is why starting early matters so much.
A ULIP (unit-linked insurance plan) invests your premium in market funds and adds life cover. Its returns depend on the fund and on several charges taken from your money. The charges are listed in the benefit illustration you get when you buy; enter them here to see what they cost against a plain mutual fund.
The four charges
Premium allocation: a share of each premium kept before investing, usually in the first years. Policy administration: a fixed amount taken from the fund. Mortality: the cost of the life cover, taken from the fund. Fund management: a yearly percentage of the fund, like a mutual fund's expense ratio.
The calculator takes the first three each year, grows the rest at your expected return, then takes the fund charge. Many ULIPs now have little or no allocation charge and return the mortality charge at maturity; if yours does, set those to 0.
Tax
ULIP proceeds are tax-free for a policy issued from 1 February 2021 only if the yearly premium is at most 10% of the sum assured and your total yearly premium across such ULIPs is at most ₹2,50,000 (Income-tax Act, 2025, Schedule II). Above that, the gain is taxed. Mutual fund gains are taxed when you sell, so compare after tax for your own case.
Key takeaways
- Compare a ULIP with a mutual fund plus a separate term plan, using your policy's own charges.
- The fund charge and early allocation charges cost the most over long periods.
- ULIP maturity is tax-free only within the ₹2.5 lakh yearly premium limit.
Frequently asked questions
Is ULIP better than a mutual fund?
Only if its charges are low. In the example on this page, the charges leave a ULIP ₹4,63,878 behind a mutual fund after 15 years, before tax. The life cover can be bought far more cheaply as a term plan.
Is ULIP maturity tax-free?
For policies issued from 1 February 2021, only if the yearly premium is at most 10% of the sum assured and your total yearly ULIP premium is at most ₹2.5 lakh.
What charges does a ULIP have?
Premium allocation, policy administration, mortality (the cost of the life cover) and fund management, plus switching and discontinuance charges in some cases. They are all listed in the policy's benefit illustration.