NPS vs. ULIP: Which Insurance is Better for You?

National Pension Scheme and unit-linked insurance plans come to mind whenever individuals plan to save money for retirement. However, choosing between NPS and ULIP often becomes hard for first-time insurance plan buyers since they aren’t sure how to differentiate between them. 

When choosing between the National Pension System (NPS) and Unit Linked Insurance Plan (ULIP), there are several factors to consider. These factors will help you align the choice with your financial goals, risk appetite, and investment horizon. That’s why we decided to list out all the major differences between NPS and ULIP.

In this article, Aapka Policywala – trusted for buying pension plans online in India – will share everything about the National Pension Plan (NPS) and unit-linked pension plan (ULIP). Let’s start!

NPS vs. ULIP: Meaning

The National Pension Scheme (NPS) is a government pension scheme for employees working in the private, government, public, and unorganized sectors. However, people serving in the armed forces cannot invest in the National Pension Scheme.

Unit-linked pension plans offer investors both insurance and investment opportunities. ULIPs are known for their flexibility, transparency, and the ability to switch between investment options. The objective of unit-linked pension plans is to offer the opportunity for wealth growth alongside insurance coverage.

NPS provides a mix of equity, debt, and government securities to generate returns over the long term. It aims to provide financial security after retirement and is also known for its low-cost structure and tax benefits.

Under unit-linked pension plans, a portion of the premium paid goes toward insurance coverage, and the remaining amount is invested in funds of your choice such as equity, debt, or balance funds.

NPS and ULIP: Major highlights 

Below are the major features of a National Pension Scheme and unit-linked pension plans:

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NPS vs. ULIP: Comparison

Choosing between NPS and ULIP depends on many factors and below are some of them:

Retirement Planning

Wealth Creation

Recommended: Learn everything about critical illness insurance plans in India.

Investment flexibility

Investment horizon

Cost structure


Risk appetite

We hope that the difference between the National Pension Scheme (NPS) and the unit-linked pension plan (ULIP) is pretty clear now! In case it isn’t and you are still confused about which one is best for you, here is a quick breakdown of both retirement options.

Buy a National Pension Scheme (NPS) if:

Buy a Unit-linked pension plan (ULIP) if:

NPS vs. ULIP: Invest Wisely 

We hope that the above article helped you learn about the difference between the National Pension Scheme and the unit-linked pension plan. The choice between NPS and ULIP depends on your financial goals, risk tolerance, and investment strategy.

Got any queries to ask? Please email us at info@aapkapolicywala.com so our pension experts can answer them. We are also home to some of India’s best insurance service providers and bring the best plans from them. 

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