What exactly is a ULIP plan? My parents keep mentioning

Insurance
1

Okay this is probably a really dumb question but I’m 24 and just started working, and literally everyone around me keeps talking about “ULIP plans” like I should know what they are.

My mom’s like “beta, you should get a ULIP for tax savings” and my colleagues are discussing their ULIPs during lunch breaks. I’ve been nodding along but honestly have no clue what they’re talking about.

I tried googling but got bombarded with technical jargon about “unit-linked” this and “market-linked” that. Can someone please explain in simple terms what a ULIP plan actually IS and why people keep recommending it?

2

Let me break it down super simply:

ULIP = Unit Linked Insurance Plan

Think of it like a combo meal at McDonald’s, but for your money:

:hamburger: Main item: Life insurance (if you die, your family gets money) :french_fries: Side item: Investment (your money grows in stock market) :cup_with_straw: Drink: Tax benefits (you save taxes on what you put in)

How it works in plain English:

  1. You pay money every month/year (like a premium)
  2. Part of that money buys you life insurance
  3. Remaining money gets invested in mutual funds
  4. You get tax deductions under 80C (same as PPF/ELSS)
  5. After 5+ years, you can withdraw everything tax-free

Why people like it:

  • “One product, multiple benefits” mentality
  • Parents’ generation loves combo deals
  • Easier than managing separate insurance + investments

Why this sub often hates it:

  • High charges (they take a big cut)
  • Returns usually suck compared to doing it separately
  • You’re stuck for 5 years minimum