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ULIP Insurance Plan

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What is ULIP (Unit Linked Insurance Plan)?

A ULIP (Unit Linked Insurance Plan) is an investment cum insurance policy. It functions like a mutual fund and offers a life cover also. You can choose different types of funds - equity, debt and hybrid - depending on your risk profile and track the NAV of the funds on a daily basis. You can switch between funds from time to time. The investments and maturity amounts are tax exempted.

How do ULIPs work?

ULIPs work more like any other investment instrument.

  • You decide the funds you want to invest
  • Your investments go into purchase of funds of your choice
  • Part of your investment is used to provide life cover
  • You can invest in more than one funds
  • You can switch between funds
  • The performance of your funds determines your investment returns

How to Choose the Best ULIP Plans in India?

  • Check the past fund performance
  • Go for plans with low charges
  • Stay invested for the long term
  • Take advantage of switching and redirection features

Best ULIP Plans in India 2023

iInvest
bandhan-life-logo
iGrowth
aviva-logo
Wealth
Gain
ageas-federal-logo
Smart Wealth
Goal
bajaj-allianz-logo
Wealth
Pro
bharti-axa-logo
Wealth
Infinia
aditya-birla-capital-logo
Invest
4G
canara-hsbc-logo
Wealth
Secure+
edelweiss-life-tokio-logo
Easy invest
Online
future-generali-logo
Click 2
Wealth
hdfc-life-logo
Signature
icici-prudential-logo
Radiance Smart
Invest
indiafirst-logo
e-Invest
kotak-life-logo
New Endowment
Plus
lic-logo
Online
Saving
axis-max-life-logo
Mera
Wealth
pnb-metlife-logo
Wealth
Enhancer
pramerica-logo
Smart
Savings
reliance-logo
eWealth
sbi-logo
Growth
Plus
shriram-logo
eWealth
Royale
star-union-daiichi-logo
Wealth
Maxima
tata-aia-life-logo

Benefits of ULIP (Unit Linked Insurance Plan)

Compared to traditional life insurance plans, ULIPs offer the following benefits:

Transparent

All charges which are deducted and made known to you. There are no hidden charges in these plans.

Liquidity

You can make partial withdrawals or even complete withdrawals after the lock-in period of 5 years.

Life coverage

In addition to the investment component, ULIPs provide a life cover also.

Low surrender charges

There will be no deductions if you exit the plans after the lock-in period.

Large number of fund options

Most plans offer more than 6 investment funds with varying amounts of risk. You can choose a combination of any of them to make your portfolio attractive and secure based on your risk tolerance.

Tax Benefits

ULIPs offer tax benefits on the invested amount and the maturity amount.

What are the different charges in ULIPs?

Fund Management Charges
Policy Administration Charges
Surrender Charges
Mortality Charges
Discontinuation Charges
Fund Switching Charges

What are different types of funds that ULIPs would invest in?

Each Plan will offer funds with clear investment criteria. You can choose based on your risk appetite. A sample list of funds are shown below:

Fund - Equity Plus
Asset Class
Money Market Instruments, Cash & Deposit0-20%
Govt. Securities, Fixed Income & Bonds0-20%
Equity80-100%
Risk & Return RatingVery High
Fund - Blue Chip
Asset Class
Money Market Instruments, Cash & Deposit0-40%
Govt. Securities, Fixed Income & Bonds0-40%
Equity60-100%
Risk & Return RatingHigh
Fund - Balanced
Asset Class
Money Market Instruments, Cash & Deposit0-20%
Govt. Securities, Fixed Income & Bonds0-60%
Equity40-80%
Risk & Return RatingModerate to High
Fund - Income
Asset Class
Money Market Instruments, Cash & Deposit0-20%
Govt. Securities, Fixed Income & Bonds80-100%
EquityNil
Risk & Return RatingModerate
Fund - Conservative
Asset Class
Money Market Instruments, Cash & Deposit0-60%
Govt. Securities, Fixed Income & Bonds40-100%
EquityNil
Risk & Return RatingLow

ULIPs vs Mutual Funds

ULIPsMutual Funds
Life cover availableNo Life cover
Lock-in period of 5 yearsELSS funds have a lock-in period of 3 years. Other mutual funds have no lock-in period
Tax Benefits on Premiums & Maturity amountELSS funds offer tax deductions on premiums. But all mutual fund returns are taxable.
Large choice of funds within the same planYou have to buy different mutual funds
Free switches & rebalancing allowedNo free switches & rebalancing
Transparency - HighTransparency - High

ULIPs vs Traditional Insurance Plans

ULIPsTraditional Insurance Plans
Life cover availableLife cover available
Higher Returns & Higher RiskLower Returns & Lower Risk
Transparency - HighTransparency - Low
Lower ChargesHigher overall charges
Can exit after lock-in period of 5 yearsHigh charges in case of early exit from plan

FAQs on Personal Accident Insurance

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How much return is guaranteed in ULIPs?

Returns are not guaranteed in ULIPs. The returns will depend on the performance of the funds selected by you.
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What are the Income Tax Benefits on ULIPs?

If the overall insurance premiums paid by you are less than 5 lakhs in a year, they will be exempted from tax. The Maturity amount also will be tax free.
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Can I surrender my ULIP before five years?

Yes, you can partially or completely withdraw from a ULIP after 5 years with no charges being deducted.
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How can I track my ULIP's fund value?

The NAV of your funds are published on a daily basis. You can track your fund value of ULIPs on daily basis.
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Can we increase the premiums for a ULIP?

Yes, you can increase the investment amount by way of top-up premiums.
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Can we purchase a ULIP with only a single payment?

Yes, you can invest in ULIPs as single premiums also.
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What is the expiry date of the lock-in period?

All ULIPs have a compulsory 5 year lock-in period from the date of policy issuance.