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ULIP - Unit Linked Insurance Plan

ULIP is a type of life insurance plans. ULIPs are a blend of life insurance and investment. It is a financial tool that provides dual benefits of life cover and allows the life assured to grow their wealth by investing their money in different market linked fund options. Under unit linked insurance plans part of the premiums paid are utilised for life cover and the remaining portion is used to invest in market linked fund options chosen by the life assured. One can switch fund options in case they are not satisfied with the performance of the fund option chosen. Returns under an ULIP depend on the performance of the market linked fund option.

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What is ULIP (Unit Linked Insurance Plan)?

ULIP or Unit Linked Insurance Plan is a life insurance product. It is a combination of life insurance and investment. A great financial tool, ULIP plans require the policyholder to make regular premium payments. ULIPs are a popular financial instrument that creates a corpus for you, thereby maximizing your savings.

One portion of the premium paid for ULIPs, or Unit Linked Insurance Plans, is used for life insurance, while the other is used for investment. After charges such as fund allocation charges, policy administration charges, fund management charges, and mortality charges have been removed, the investment is made.

Why You Should Invest In ULIPs?

ULIPs combine the best features of insurance and investment, making them a better option than either investment or insurance on their own. By purchasing a ULIP, you may gain from the share market without taking significant risks, while also providing a safety net for your family in the form of life insurance. Here are a few reasons why ULIPs are an excellent investment option for you.

  • Higher Returns: For a 10 period, investing in ULIPs can provide 12 % to 15% returns on investment.
  • Wide Range Of Investment Options: An investor can select between aggressive ULIPs that mainly invest in equities and conservative ULIPs that invest in the debt market, depending on their risk profile.
  • Flexibility: ULIPs offer the flexibility to choose between multiple schemes based on the risk appetite of the investor and changing conditions. The ability to choose between several fund options depending on the financial condition of the one allows an investor to take full advantage of investing opportunities.
  • Liquidity: In the event of an emergency or an unexpected event, a ULIP allows you to take a part of your funds to satisfy your needs.

How Does A ULIP Plan Work?

The premiums you pay to buy and keep your ULIP are divided into two parts. One half is utilised to give life insurance. The balance of your premium is invested on your behalf. Our fund managers will guide you through the process, but the final decision on which funds to invest in is yours.

Types Of ULIP Insurance Plans

Following are the types of ULIPs based on the kinds of funds they invest in:

  • Equity - The capital of the investor is used to buy equity shares in one or more companies. It's a great option for those who are willing to take on a lot of risk.
  • Debt - Here funds are invested in debt instruments like corporate bonds, Government bonds & securities, debentures, and fixed income bonds. While the risk ranges between medium to low, the returns associated are also only moderate.
  • Liquid Funds - This ULIP is ideal for achieving short-term financial objectives. The funds of the investor are kept in highly liquid money market instruments in this account.Also the maturity period ranges between a few weeks to months.
  • Balanced Funds - Here the money is invested in both equity and debt instruments. The returns are more stable in this type.
  • Cash Funds - Ideal for investors who do not have a high risk appetite, cash funds are the ULIP type that offer low returns.

Key Features Of ULIP Plans

ULIP plans have a number of advantages that make them the preferred investment option of the investor. Aside from the many tax advantages and the potential to build wealth over time, the life insurance provided by ULIP plans serves as a safety net for policyholders. The following are some of the key features of ULIP plans.

  • Flexibility- One of the most important features of ULIP plans is the ability to change between different funds. You can swap between multiple funds to enhance your returns depending on your financial goals, market situation, and risk-taking ability. ULIPs offer the option of partial withdrawals in addition to the possibility to switch.
  • Multiple benefits- ULIPs are a popular investment option. Its ability to combine the benefits of insurance and investment sets it different from traditional investment options. Furthermore, you can choose the kind of investments you want to make based on your risk profile. You can always switch between the funds depending on market conditions.
  • Financial security- ULIPs are a good investment option if you are willing to invest for the long term. When it comes to achieving big returns, the investment time horizon is critical. Over a lengthy period of time, equities do well. If you start early, you can invest in aggressive ULIP plans that invest in equities, and then gradually convert to low-risk debt funds. The funds accumulated during the lifetime of the policy can give financial security once you retire.

Benefits of ULIP Insurance

Key benefits of ULIPs are:

  • Market Linked Returns - ULIPs helps in earning market-linked returns by dedicating a portion of the premium invested into debt and equity instruments.
  • Life Protection with Savings - ULIPs provide the dual benefit of life insurance protection as well as savings.
  • Flexibility - ULIPs, or unit linked insurance plans, allow you to switch between investment funds, make partial withdrawals in an emergency, and invest extra cash with single premium additions.
  • Tax Benefits - Premium paid towards ULIP plans is eligible for tax deduction under Section 80C of income tax 1961, up to a maximum of Rs. 1.5 lakh. Also, the maturity/death benefit received under the ULIP plan is free from tax under Section 10(10D) of the Income Tax Act 1961.

Why Choose InsuranceDekho?

A few reasons why you should choose InsuranceDekho to buy ULIP:

  • Quick Policy Issuance: At InsuranceDekho, you can quickly get your ULIP issued. All you need to do is provide personal details, compare available options, purchase the best plan, make the payment & submit the desired documents.
  • Committed Customer Service: InsuranceDekho has a customer assistance team available 24x7 to provide the best possible solution to all your ULIP related queries.
  • Availability of Top Plans: InsuranceDekho has partnered with the best life insurance plans in India to provide a wide range of best ULIPs at reasonable premium rates.

How To Buy ULIP With InsuranceDekho?

Here’s how you can buy ULIP with InsuranceDekho:

  • Enter Details: Provide your name, mobile number, gender and date of birth. Click on the ‘View Instant Quotes’ button to check available quotes.
  • Insurance Quotes Comparison: You will find different ULIP insurance quotes based on the details provided. Compare the available plans and select the one that suits your requirements.
  • Make The Payment: After choosing your ULIP, adjust the sum assured and the policy term. Make the payment for the premium once everything is finalized via netbanking or debit/credit card.
  • Submit Necessary Documents: Submit desired documents like photo ID proof, address proof, age proof, and a passport size photograph along with required medical records.

Investment Insurance Companies

Disclaimer: InsuranceDekho does not endorse, rate or recommend any particular insurance company or insurance plan.

FAQ About ULIP - Unit Linked Insurance Plan

  • What is the fund value in ULIP?

    Fund value is the total monetary worth of the units that a policyholder owns. 

  • What is the sum assured in ULIP?

    Sum assured in ULIP is the minimum guaranteed amount that a nominee receives in the event of policyholder's death. 

  • What is the lock-in period of ULIP?

    The lock-in period of ULIP is 5 years. 

  • Can I withdraw my ULIP funds anytime like in the case of mutual funds?

    No! You can withdraw funds only after 5 years. 

  • Can I get my ULIP premium refund if I am unsatisfied?

    Yes! You can request a refund after 15 days of free-look period. 

  • Why should I buy a single premium ULIP?

    You can buy a single premium ULIP if you don’t want to pay the premium regularly and a policy lapse. 

  • What are the ULIP options available under LIC?

    Some of the key ULIP options available under LIC are Nivesh Plus, SIIP, and New Endowment Plus.

  • Which section covers ULIP for tax deduction?

    ULIP is covered for tax deduction under Section 80C of the Income Tax Act, 1961.

  • Why should I buy ULIP?

    You should buy ULIP if you want life insurance cover, income tax benefits, finance long-term goals, and switch your investment portfolio. 

  • Are ULIPs the same as mutual funds?

    No! ULIPs and mutual funds differ based on features like nature, withdrawal, switching and charges. 

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