Term insurance vs. ULIP: which is better for wealth + protection?

The pitch for a ULIP is convenience — one product, one premium, insurance and investment together. The problem is that bundling almost always means you overpay for the insurance and underperform on the investment, compared to buying each separately.

A term plan gives you significantly higher life cover for a fraction of a ULIP’s premium, because none of that premium is being diverted into fund management or diluted by mortality charges baked into the same product. Put the difference into a mutual fund SIP and, over the same horizon, you typically end up with both better cover and a larger corpus.

The one case where a ULIP can make sense is a specific tax-planning need late in a financial year — but that’s a narrow exception, not a reason to default to it as your core protection product.