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5 Easy Steps To Choose An Unit Linked Insurance Plan

Published On Dec 13, 2021 10:00 AM By InsuranceDekho

The payments you contribute are deposited in the securities you choose after allocation fees and charges including those for raising liquidity, policy management, and insurance benefits are removed from the financing by canceling some units in a Unit Linked Insurance Plan (ULIP). Divide the entire price of the fund's holdings by the total units to get the value of each piece.

What Are The Benefits Of ULIP?

  • Returns that are linked to the market
  • Flexibility in Life Insurance, Investments, and Savings

5 Easy Steps To Choose An Unit Linked Insurance Plan

Below are 5 easy steps to choose a Unit Linked Insurance Plan:

1. Decide On A Flexible ULIP Strategy

A ULIP must allow users to increase funding and control their asset allocation as per their preferences. ULIPs enable you to swap among investments whenever you want and as the economic situation changes. You are free to change assets up to 12 instances each year.

You could also freely transfer your set price from one vehicle to another and then a group of funds without incurring any fees. You also have the option of adding top-up improvements to your ULIP if you feel you require additional coverage.

2. Examine The ULIP Premiums

In India, there are certain ULIP charges that must be paid from period to period by all ULIP customers. These fees vary by provider, however, they must not surpass the maximum specified by India's Insurance Regulatory and Development Authority. 

  • Premium allocation charges: These fees cover the cost of distributing your contributions to various fund options. They range from 1% to 6% of the average premium value invoiced per year.
  • Charges for fund administration: These fees range between 0.65 percent and 1.20 percent of each fund's value each year while the ULIP is in effect.
  • Charges for policy management: Policy administration fees cover the monthly management of the ULIP's overall performance. They are restricted to a monthly budget of Rs. 500.
  • Changing funds fees: You are allowed to make up to 12 free switches each year, after which you will be charged between Rs. 100 and Rs. 250 every switch. Other fees associated with ULIPs include modest mortality and policy cancellation fees.

3. Examine The ULIP's Riders

Because ULIPs include life insurance coverage, it's crucial to double-check the scope of protection offered in that area as well. Aside from the sum assured, your ULIP should include riders that provide additional financial help in the event of unforeseen and severe circumstances.

The ULIPs ensure that your loved ones' financial stability is not jeopardized during difficult times by including riders such as:

This rider pays an additional rider payment to your family in the event of your untimely death due to an accident. It also pays a proportion of the rider sum assured if you are permanently disabled, suffers burns, or lose physical functions as a result of an accident.

4. Purchase Your ULIP On The Internet

Finally, acquiring ULIP coverage online is usually a good idea. Because internet insurance policies are provided without the use of any middlemen, you may be entitled to premium discounts and other benefits. Furthermore, purchasing and managing your ULIP coverage simply takes a few minutes.

5. Select A ULIP With More Fund Possibilities

First and foremost, a ULIP should provide a wide range of investment choices. The primary goal of a ULIP is to increase your wealth. Due to the restricted number of market-related funds available, your ULIP performance is unlikely to generate significant gains. You won't be short on fund options as we provide a comprehensive mix of equities, debt, and money-market funds to help you maximize your returns. Depending on your risk tolerance, you can choose from low, medium, or high-risk fund options.


Purchasing a ULIP ought to be a well-considered option because you'll be in it for the long haul if you acquire it. It is critical not to rush the purchasing process and to select one with the greatest wealth-building prospects. Give your budget priority, but the benefits of the ULIP should take precedence.

Checking the assurer's credentials and brand recognition in the business is another thing you may do before deciding on a ULIP investment. Furthermore, keep in mind that the market does not cease fluctuating, thus there is no perfect time to invest in a ULIP. Instead, you should plan ahead and handle your money wisely.

Do read - Unit Linked Insurance Plans - Key Features, Benefits, Exclusions, etc.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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