Difference Between Linked and Non-Linked Insurance Plans

Insurance Plans


More than ever before, the world has recognized the fragility of human life and how a comprehensive insurance coverage is more of a need than a choice. Even if it is impossible to place a monetary value on life, it is necessary to link one with the individuals who make it unfathomably good. So, for the sake of the people you care about and those who rely on you for their necessities, you should get a comprehensive insurance coverage.

With so many varied types of insurance plans available in the market, selecting the correct insurance policy can be difficult. However, as previously said, it is critical to select a plan that meets your needs, has the necessary features, and is within your budget.

Two of the most important parameters that separate insurance policies into two categories are linked and non-linked insurance plans. Linked insurance policies are insurance plans that provide insurance coverage as well as returns based on market performance. The most common type of linked insurance plan is the Unit Linked Insurance Policy, abbreviated as ULIP Insurance. Non-linked insurance plans, on the other hand, are classic insurance plans that either give solely insurance coverage or provide insurance coverage combined with guaranteed returns that are not connected to market forces.

Here’s a breakdown of the differences between linked and non-linked insurance plans:

Non-Linked Insurance Plans

Non-linked insurance plans are standard insurance plans that merely seek to provide complete financial protection to your family in the event of your untimely death during the policy’s term. Because these insurance plans are not tied to the market, their returns are not determined by how the market performs. Non-linked insurance plans are low-risk investments with well-defined death or maturity benefits. Some of these plans provide guaranteed returns, such as bonuses and loyalty rewards.

Non-linked insurance plans include term insurance, a guaranteed savings plan, an endowment policy, a money-back policy, and other similar plans. Term plans, on the other hand, are non-participating life insurance plans in which you do not earn any incentives or add-ons; instead, you just receive a fixed insurance cover in exchange for the premiums you pay.

Linked Insurance Plans

Linked insurance policies are sometimes known as insurance-cumulative-investment programs. These insurance plans are tied to the stock market, and their returns are determined by how well the market performs. In such plans, a portion of the premiums you pay for your policy are utilized to provide you with reliable insurance coverage. The remaining premiums are invested in the market, in funds of your choosing and in accordance with your risk tolerance, investment horizon, and financial objectives.

The most prevalent kind of linked insurance plan is the ULIP insurance, often known as a Unit Linked Insurance Policy.

Difference Between Linked and Unlined Insurance Plans

Here are some key distinctions between non-linked and linked insurance plans:


Linked insurance plans, such as the Unit Linked Investment Policies, provide greater investing options. You can invest in funds that best suit your risk tolerance, investment horizon, and financial objectives. So, if you want to take chances, you may invest in equity-based funds, which carry a larger risk but can provide higher returns. Non-linked insurance policies, on the other hand, do not enable you to select your assets. Your money is invested at the discretion of the insurer.

Maturity Benefit:

In the case of linked insurance plans, such as a Unit Linked Investment Policy, the units purchased at the time of ULIP policy acquisition are returned to you at maturity based on the then-current market value. Furthermore, ULIP plans provide annual incentives and loyalty adds at maturity. Non-linked insurance policies, on the other hand, pre-define your sum assured as well as promised returns at the time of policy acquisition.


When compared to non-linked insurance plans, your investment in linked plans, such as a Unit Linked Investment Policy, is more transparent. You select your assets based on your preferences and may keep track of your portfolio on a frequent basis. In addition, the insurance provider provides you frequent reports on your units and the premiums you pay. Non-linked insurance plans, on the other hand, do not have an investment component, so you have no idea how your money is invested.

Make a Wise Choice

Your own preference will determine whether you choose non-linked insurance plans or connected insurance policies. You can invest in a non-linked insurance plan if you are a risk-averse investor. If you desire high profits and are willing to face the risk, you should opt for linked plans such as Unit Linked Insurance Policies from reputed insurance providers.

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