ELSS vs United Link Insurance Plans (ULIPs)

ULIP has a lock in period of three to five years. ULIP has often been criticized due to lack of transparency along with high costs. The overhead costs such as the premium allocation charge and the policy administration charges in the investment of ULIPs have often been known to eat in to the returns. Hefty surrender charges are levied if the investment is withdrawn before five years often making this a very expensive investment. No such charges are applicable for ELSS except for a minor annual management fee deducted by the Asset Management Company. The performance of ULIP is often hampered by the overhead and administrative cost involved. The same is not applicable for ELSS.