Unit Linked Investment Plan (ULIP) invests the premium you pay for the plan in equity or debt instruments as per your choice. So, you have the freedom to choose the asset class you want to invest in with ULIP. Rebalancing the ULIP fund portfolio means allocating the fund in either equity or debt per your risk appetite, financial goals, and market conditions. Suppose you started with equity investments for higher returns when you purchased the ULIP plan. However, over the years, your investment goal has changed, and also the market has become volatile, so you want to invest in debt funds for better security and stable returns. This is a rebalancing of the ULIP portfolio that is to align the ULIP portfolio as per risk tolerance, financial aspirations, and market scenario.