ULIP in retirement planning: Should you invest in one?

We all have life goals that we wish to accomplish at certain stages of life. Some goals could short-term, and some could be long-term. No matter what the duration of the goal, you need to have sufficient capital to achieve those goals. While one might consider using their savings, it is not a prudent choice.

Growing your wealth by investing in a plan like ULIP can help you in fulfilling your goals while safeguarding your savings. If you are planning your retirement, you should consider investing in a ULIP. How does a ULIP fit into retirement planning? Read more to find out.

What is a ULIP?

A ULIP plan is a type of life insurance, which offers you the dual benefit of investment and insurance under the same plan. The premium paid towards the plan is used for both components. In the investment component, you get to invest in equity, debt and balanced funds. Equity and debt funds have different risk factors and offer different rates of return. Your requirements and risk appetite is taken into consideration while investing.

In the insurance component, your dependents are provided with a life insurance cover. This cover provides your family with a death benefit if you were to suddenly pass away during the term of the plan. The amount received can help manage daily expenses and build a financially secure future for themselves in your absence. 

What is retirement planning?

In simple terms, retirement planning is planning for your life post-retirement. As you near the age of retirement, you have to take into account different factors that can affect your life post retirement. The most important being the source of income. While you are working, your job is your source of income. However, once you have retired, your savings and investments are the only source of income you would have to rely on. Retirement planning helps you in creating a plan where you can set the goals you wish to accomplish once you retire. It also helps you in allocating your finances as per requirements post-retirement. 

How does a ULIP fit into retirement planning?

As mentioned earlier, ULIPs offers you the chance to invest and grow your wealth for the future. These investments are done in market-linked funds, specifically equity and debt funds. Equity fund is a high-risk, high returns fund, whereas debt fund is a low to medium risk, medium returns fund. A mixture of these two funds is known as balanced funds.

When you invest in a ULIP at an early stage, you can maximise your returns by allocating a majority of your funds in equity. The risk is high; however, the returns are also good. This can help you building a good corpus in the beginning itself. At the same time, you can invest in debt funds as well to get stable and consistent returns due to the low risk associated with this fund.

After a few years, you can switch your investment from one fund to another. Switching your investment allows you to mitigate the risks associated with the market. As the market is volatile, it can have an impact on your investment and returns. If you wish to safeguard your returns, you can switch from equity to debt. This will ensure your returns do not take a hit if the market gets destabilised. 

Lastly, you can top-up your premium to increase the value of your investment in the funds. A top-up premium is an extra amount of premium in addition to your existing premium. Top-up premium can help you in increasing your investment in the fund of your choice and gain more returns. This way you can go for ULIP retirement planning.


If you wish to have a financially secure for yourself and your loved ones after your retirement, you should consider investing in a ULIP. Before you invest, you can use the ULIP return calculator to see how much your returns would be based on the amount you invest.