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Choosing Between ULIP and PPF:

When planning for your financial future, you may come across ULIP and PPF as popular plans in India. It might be difficult to choose between them. Essentially, ULIP is combines life insurance and market linked returns. Public Provident Fund (PPF) is a government backed saving scheme offering fixed returns and is highly safe and secure.

 

So, which one should you select - ULIP or PPF? The answer will depend on what you are looking for - are you looking at safety or growth, fixed money or market returns, life cover or savings? In this blog, we will very clearly differentiate between ULIP and PPF. We will explain how they work, their features and how they function so that you can make an informed decision.

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Written ByShruti gujarathi
AboutShruti gujarathi
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Shruti gujarathi has 5 years of experience in the BFSI sector, and as Manager- Digital Marketing at Bajaj Allianz Life Insurance, manages digital and content marketing. She has had hands-on experience in content strategy, performance marketing and Strategic Alliances over a career spanning 10 years.
Reviewed ByRituraj Singh
AboutRituraj Singh
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Rituraj Singh,With over 6.5 years of experience in the insurance industry, Rituraj Singh, Manager- Product & Brand Marketing at Bajaj Allianz Life Insurance overlooks new product launches, compliance, and brand projects, leveraging artificial intelligence and technology to enhance outcomes.
Written on: 30th May 2025
Modified on: 02nd June 2025
Reading Time: 15 Mins
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What is Public Provident Fund?


Understanding ULIP vs PPF is essential before purchasing any plan. Let's start with the Public Provident Fund (PPF). This is a savings scheme run by the Government of India. It was designed to help people save money for their future, especially after retirement.


PPF is a safe option. The contribution earns interest every year. This interest is fixed by the government and is revised quarterly. It has a lock-in period of 15 years which means you can only withdraw the full amount after 15 years. Despite that, PPF offers good tax benefits.


Some Top Features of PPF (benefits of investing in PPF)


  • Safe and Government-backed: PPF is one of the safest ways to save money. The government assures to return your money along with earned interest.
  • Fixed Returns: The interest rate is fixed by the government every three months. The rate for April–June 2025 is 7.1%.1
  • Tax-Free Returns: You don’t have to pay any tax on the interest you earn from PPF. This makes it a great tax-saving option.
  • Long-term Savings: PPF is best for people who want to save for their retirement or long-term goals like buying a house or children’s education.
  • Low Minimum Deposit: You can start with as little as ₹500 per year. The maximum limit is ₹1.5 lakh in a year.2
  • Loan and Partial Withdrawal: You can take a loan against your PPF after 3 years till the 6th year. Partial withdrawals are allowed from the 7th year.3

What is a Unit Linked Insurance Plan?


A ULIP is a type of insurance plan that provides you with life cover along with a chance to grow your invested amount. In a ULIP, a part of the premium paid is allocated to life insurance and the other part is invested in funds like equity, debt, or a combination of both. These funds work like mutual funds. You can track their performance and even switch between them.


You can also use ULIP calculators available online to get an estimate of returns. However, one must note that the actual returns depend on the market performance.


Some Top Features of ULIPs


  • Dual Benefit: ULIPs provides life insurance and a chance to grow your invested amount in a single plan.
  • Fund Switching: Few plans allow you to switch your funds, based on market performance.
  • Partial Withdrawals: After 5 years, partial withdrawals are allowed as per policy terms and conditions.
  • Top-ups: You can add additional funds to your ULIP anytime during the policy term.
  • Tax Benefits: You can get tax deductions under Section 80C of the Income Tax Act under the old regime. But if your yearly premium is more than ₹2.5 lakh (for policies bought after Feb 1, 2021), you may have to pay tax on returns.
  • Lock-in Period: The minimum lock-in period is 5 years.
  • Market-linked Returns: Returns are not fixed and may vary upon the performance of funds chosen.

Difference ULIP vs PPF


There are many factors to be considered when comparing ULIP and PPF. One major difference is that PPF gives fixed interest, while ULIPs give returns based on market performance. PPF is very safe and ideal for people who prefer a risk-free approach. ULIP, on the other hand, is suitable for people willing to accept some risk in exchange of potential growth.


PPF has a long lock-in of 15 years. ULIPs have a shorter lock-in of 5 years. ULIPs primarily also offer life insurance, which PPF does not.


Factors to Consider Before Choosing ULIP and PPF


  • Risk Level: PPF is safe. ULIP is risk associated as it is linked to the market performance.
  • Returns: PPF gives fixed returns. ULIP returns can fluctuate depending on the fund performance.
  • Lock-in Period: 15 years for PPF, 5 years for ULIP.
  • Insurance: ULIP provides life cover while PPF does not.
  • Tax Benefits: Both offer tax benefits under Section 80C of the Income Tax Act.
  • Withdrawal Options: PPF allows partial withdrawal after 7 years. ULIP however allows it after 5 years.
  • Goal Type: PPF suits long-term saving goals. ULIP on the other hand is ideal for combination wealth building and protection.

Which is Better - ULIP or PPF?


Here’s a quick guide to help you decide:


  • Choose PPF if: You want a safe savings plan for your future with fixed returns.
  • Choose ULIP if: You want both insurance and potentially long-term financial growth through market-linked options.
  • Your Risk Comfort: Choose PPF if you don’t have an appetite for market risk and ULIP if you can digest market ups and downs.
  • Your Investment Goal: Both PPF and ULIP are long-term options. PPF is ideal for stable wealth creation over time, often used for retirement. ULIP fits if you want to build wealth while securing your family’s financial future with life cover.

Conclusion


PPF and ULIP have different purposes and are designed for a different types of customers. PPF is good for those who a secure home for their money with a fixed return. PPF is backed by the government, therefore there’s carrying a minimal risk. ULIPs, on the other hand, help you potentially grow your money through market-linked funds along with life insurance cover, which is a significant advantage.


Before choosing, one must consider their goals. Do you prefer fixed savings? Do you want insurance too? Once you answer these, the choice becomes simple.


In simple words:


  • Want safety and stable returns? Pick PPF.
  • Want growth and insurance in one? Pick ULIP.
  • Still confused? Ask a financial expert.

FAQs


How do ULIP or PPF suit your financial goals?


PPF (Public Provident Fund) and ULIP (Unit Linked Insurance Plan) are essentially savings and life cover options for individuals, respectively. PPF is a risk-free savings option because the government gives fixed interest and the return is guaranteed. ULIP is ideal for those who want to potentially help grow their savings by taking the risk of market fluctuations while also obtaining life insurance.


Which scheme can provide good returns and Life cover?


You can purchase a ULIP, but these are not risk-free. They provide life insurance and the value of your invested amount will vary as per the market movement. So, the returns may vary; however, it generally provides good returns when held for a longer tenure.


References:


  1. https://economictimes.indiatimes.com/wealth/invest/public-provident-fund-ppf-was-interest-rate-changed-for-april-june-2025-quarter/articleshow/120003105.cms?from=mdr
  2. https://economictimes.indiatimes.com/wealth/invest/top-5-post-office-deposits-with-returns-up-to-8-20/sukanya-samriddhi-yojana/slideshow/121132421.cms?from=mdr
  3. https://www.nsiindia.gov.in/(S(jn2kb155lwduqcbnjmv34n24))/InternalPage.aspx?Id_Pk=55

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IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER

The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year.

ULIPs are different from the traditional insurance products and are subject to the risk factors. The premium paid in ULIPs are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

 The views stated in this article are not to be construed as investment advice and readers are suggested to seek independent financial advice before making any investment decisions. For more details on risk factors, terms and conditions please read the sales brochure & policy document (available on www.bajajallianzlife.com) carefully before concluding a sale. Bajaj Allianz Life Insurance Company Ltd., Regd. office Address: Bajaj Allianz House, Airport Road, Yerawada, Pune - 411006, Reg. No.: 116, CIN: U66010PN2001PLC015959, Call us on toll free No.: 1800 209 7272, Mail us: customercare@bajajallianz.co.in

Tax benefits as per prevailing 80C (under old tax regime) of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.

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*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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%%Above illustration is for Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V03) considering Male aged 25 years | Non-Smoker | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 6,238. 2nd Year onwards premium is Rs. 6,659. Total Premium Paid is Rs. 1,99,349 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly installments (Lumpsum Payout Percentage : 45, Income Payout Percentage : 55) | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. This is inclusive of all the discounts mentioned above.

##Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

@Term Insurance plan bought online directly from Bajaj Allianz Life Insurance has no commissions involved.

^^The Return of Premium amount is total of all the premiums received, exclusive of extra premium, rider premium and GST & /any other applicable tax levied, subject to changes in tax laws
Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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Disclaimer

The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year.

ULIPs are different from the traditional insurance products and are subject to the risk factors. The premium paid in ULIPs are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Bajaj Allianz Life Insurance Company Limited is only the name of the Life Insurance Company and Bajaj Allianz Life Goal Assure II- A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN No.: 116L180V02) is only the name of the unit linked insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

Bajaj Allianz Life Goal Assure II - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L180V02)

**Return of Mortality Charges at Maturity (ROMC) is payable at maturity, provided all due premiums have been paid

Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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Disclaimer

Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V04)

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116


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