Difference between Linked and Non-Linked Insurance Plan

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Non-linked insurance plans are the traditional types of insurance plans that only aim to provide complete financial protection to your family when any unexpected demise occurs. This type of insurance plan is not linked to the market, meaning no returns are based on the market values.


Linked insurance plans such as the Ulip plan are considered investments and insurance options. This insurance is linked to the market and returns also depend on how the market performs.

We will outline the elements that distinguish linked insurance plans from non-linked insurance plans in this article.

Linked Vs Non-Linked insurance plan

The difference between the linked and the non-linked insurance plans are based on the following factors.

1. Investment flexibility

A linked insurance plan or the ULIP plan provides flexibility in the investment terms. You can easily choose the funds in which you want to invest. If you have a linked insurance plan, then you can easily invest in the funds that are suitable to your investment horizon, risk appetite, and financial goals.

On the other hand, the non-linked insurance plan does not permit you to choose the funds. The insurance provider selects the funds invested in your Non linked insurance plan.

2. Maturity benefit

In the case of the ULIP plan, the units bought by you at the time of the insurance plan are provided to you at the maturity of the market values. In the case of the non-linked insurance plans, you can predefine your guaranteed returns as well as the sum assured at the time when you buy this policy.

3. Transparency

The investment made in the linked insurance plan is more transparent than the non-linked insurance plans. It means you can choose the investment according to your preferences and check your portfolio in the ULIP plan.

4. Partial withdrawal

Linked insurance plans provide you with the option to withdraw your funds partially with ease. It means you can easily use these features of the linked insurance plan when you require them.

If you buy non-linked insurance plans, then you have no option to withdraw your money partially. In this case, if you require money, you need to surrender the policy.

5. Switching option

Linked insurance plans provide you with the option to switch your fund when your preferences are changed according to the time.

For example, if you invest your money in equity-based funds and then switch to low-risk funds, you can easily do it if you have a linked insurance plan.

The non-linked insurance plans do not provide their policyholders with the switching fund option.


The investment decision that takes place between the linked and the non-linked insurance plans are based on the preference of every individual. If you do not want to take the risk with your invested money, you should choose the non-linked insurance plan. If you are ready to afford the risk, you should choose the linked insurance plans.


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