Are There Any Specific Risks NRIs Should Note with ULIPs?

Yes, the main risks include higher charges, longer lock-in, the possibility that tax exemption may not apply if the premium thresholds are crossed, and surrender penalties if you choose to discontinue early.

Can US/Canada NRIs Freely Invest in ELSS and ULIPs?

Some mutual fund houses and insurers don't permit onboarding of US/Canada NRIs because of the FATCA and local regulations, so you need to check each ELSS fund or ULIP's NRI policy before investing.

Which is Usually Better for NRIs, Between ELSS or ULIPs?

For most NRIs, focusing on investment and tax-saving, ELSS tends to be a better option because of its shorter lock-in period, lower costs, higher transparency, and easier portfolio management. On the other hand, ULIPs are more ideal only when an NRI particularly wants an integrated insurance-plus investment product and can commit long-term.

Investment & Financial Planning

ELSS vs ULIP: Which is Best for NRIs?

By Manish Prajapat |Last Updated: December 20, 2025

There are a lot of investment instruments available in India when it comes to financial planning. Two very popular options that stand out for the unique benefits are the Equity-linked savings scheme (ELSS) and the unit-linked insurance plans (ULIPs).

ELSS is a type of diversified equity mutual fund that mainly invests in equity. It's popular for its tax-saving benefits and potential to offer high returns. On the other hand, ULIP is a type of financial instrument that combines the benefits of both a life insurance plan and an investment. In this blog, we will learn about the differences between ELSS vs ULIPs. We will also cover their key features, tax implications, and ideal choice for NRIs.

Manish Prajapat(Tax Expert)

Mr Manish is a financial professional with over 10 years of experience in strategic financial planning, performance analysis, and compliance across different sectors, including Agriculture, Pharma, Manufacturing, & Oil and Gas. Mr Prajapati has a knack for managing financial accounts, driving business growth by optimizing cost efficiency and regulatory compliance. Additionally, he has expertise in developing financial models, preparing detailed cash flow statements, and closing the balance sheets.

Frequently Asked Questions

Yes, eligible NRIs can invest in both an ELSS mutual fund and a ULIP policy, subject to KYC, PAN, and FEMA rules, and any country-specific restrictions. For example, some AMCs/insurance restricts NRIs from the US/Canada due to FATCA.

Yes, NRIs who have taxable income in India under the old tax regime can claim a section 80C deduction of up to Rs. 1.5 lakh per financial year on both ELSS investments and eligible ULIP premiums combined.

ELSS has a shorter 3-year lock-in period from each investment date, while ULIPs have a minimum 5-year lock-in period, making ELSS more flexible for NRIs who may relocate or change plans.

Generally, ELSS has lower and more transparent costs as it only charges a mutual fund expense ratio, while ULIPs bundle mortality, allocation, administration, and fund management charges, making them more expensive and complex.

If life cover is already handled through a pure term plan, then ELSS is typically more suitable for NRIs seeking a tax-saving, market-linked growth with better liquidity and reduced costs than ULIPs.

ELSS vs ULIP: Which is Best for NRIs?

Frequently Asked Questions

Can NRIs Invest in Both ELSS and ULIPs in India?

Do NRIs Get Section 80C tax Benefits From ELSS and ULIPs?

Which Has a Shorter Lock-in for NRIs Between ELSS and ULIPs?

Which is More Cost-Efficient for NRIs, Between ELSS or ULIPs?

If an NRI Already Has Term Insurance, Which is Typically Better Between ELSS and ULIPs?

ELSS vs ULIP: Which is Best for NRIs?

Frequently Asked Questions

Can NRIs Invest in Both ELSS and ULIPs in India?

Do NRIs Get Section 80C tax Benefits From ELSS and ULIPs?

Which Has a Shorter Lock-in for NRIs Between ELSS and ULIPs?

Which is More Cost-Efficient for NRIs, Between ELSS or ULIPs?

If an NRI Already Has Term Insurance, Which is Typically Better Between ELSS and ULIPs?