ULIPs and mutual funds may seem similar upfront—they both invest across different assets. However, there are some parameters which makes Mutual Fund more superior. For instance, a mutual fund only charges for managing your money and as exit fee, which is the penalty for selling units soon after you invest in the scheme.
Mutual Funds are liquid in nature. Investors can liquidate and exit funds at any time possible, unless otherwise specified. Whereas, in ULIP, a lock-in period is provided, where the person must remain invested for a specific time.