Life Insurers Eye Gold ETFs to Boost ULIP Returns Amidst Market Volatility
Mumbai, June 27, 2025 – India’s life insurance companies are seeking regulatory approval to invest in gold exchange-traded funds (ETFs), a move driven by soaring gold prices, robust global demand, and the need to diversify portfolios yielding lackluster returns from traditional asset classes. Several insurers have approached the Insurance Regulatory and Growth Authority of India (Irdai) with this proposal, according to sources familiar with the matter.
This strategic shift comes as gold etfs have substantially outperformed other investment avenues. Over the past year, gold ETFs have delivered returns exceeding 30%, dwarfing the 5-8% returns offered by liquid debt funds, equity indices like the Nifty, and traditional bank fixed deposits.
“The sharp contrast in performance is pushing us to explore gold ETFs under unit-linked insurance plans (ULIPs) to improve portfolio returns and add a hedge against market uncertainty,” one insurance executive revealed anonymously.
Insurers are requesting permission to allocate 3-5% of their ULIP assets under management – currently totaling ₹70 lakh crore – into gold ETFs. ulips already provide policyholders with the versatility to invest in equity, debt, and balanced funds based on their individual risk tolerance.
Irdai has responded by directing companies to submit their proposals through the Life Insurance Council, the industry’s representative body. This move signals a potential significant shift in investment strategies within the Indian life insurance sector, capitalizing on the strength of gold as a safe-haven asset and a portfolio diversifier. Investors looking to explore gold investment options should also consider Sovereign Gold Bonds (SGBs) which offer interest along with capital thankfulness and are backed by the government [[1]], or explore gold saving schemes offered by companies like HDFC Life [[2]]. Moreover, Unit Linked Insurance Plans (ULIPs) can offer maturity values with significant CAGR, such as ₹1,05,02,174 @ 8% or ₹50,45,591 @ 4% [[3]].