WHAT IS ULIP? Unit Linked Insurance Plans know as Ulip. ULIP are the combination of insurance

and investments. All insurance companies launched ULIP products. A part of the

premium paid is utilized to provide insurance cover to the policy holder while the

remaining portion is invested in various equity and debt schemes. Policy holders

have the option of selecting the type of funds (debt or equity) or a mix of both

based on their investment need and appetite. Just the way it is for mutual funds,

ULIP policy holders are also allotted units and each unit has a net asset value

(NAV) that is declared on a daily basis. The NAV is the value based on which the

net rate of returns on ULIPs are determined. The NAV varies from one ULIP to

another based on market conditions and the fund’s performance.

Features

ULIP NAV are good option for those wants to invest in market and have insurance

cover also, its gives more return then traditional insurance products, ULIP are

more liquated than traditional products. ULIP policy holders can make use of

features such as top-up facilities, switching between various funds during the

tenure of the policy, reduce or increase the level of protection, options to

surrender, additional riders to enhance coverage and returns as well as tax

benefits.

ULIP scheme have list of charges like FMC charges, policy fee, administration

charges, mortality charges, premium allocation charges, surrender charges, these

charges are likely to be same with all companies. Since ULIP (United Linked Plan)

returns are directly linked to market performance and the investment risk in

investment portfolio is borne entirely by the policy holder, one need to

thoroughly understand the risks involved and one’s own risk absorption capacity

before deciding to invest in ULIPs. ULIP scheme are linked with market risk. So

please read the documents carefully.

Unit Linked Insurance Plans sold in wrong manner in India. These products being

sold by 3 or 5 years products, people start taking easily as compare to traditional

insurance plans, but due to wrong information or wrong selling these products

are on the edge.

Source: https://www.bajajallianzlife.com/ulip/ulip.jsp