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What is the Difference between Life Insurance and ULIP?
I would refer you to this question and answers. Here in the US we have two basic types of life insurance: term and whole life.  Universal life is a marketing response to whole life being such a bad deal, and is whole life just not quite as bad. I am not familiar with the products in India, but given the acronym (ULIP), it is probably universal life, and as you describe is variable universal life.   Likely Description "Under the hood", or in effect, you are purchasing a term life policy and investing excess premiums in a collection of stock mutual funds.  This is a bad deal for a few reasons: A much better option is to buy "level term insurance" and invest on your own. You won't necessarily lose money, but you can make better financial decisions.  It is good to invest, it is good to have life.  A better decision would not to combine the two into a single product.