Most Frequently Asked Questions About ULIPs
Published On Jun 19, 2021 12:00 PM By InsuranceDekho
Table of Contents
- 10 Frequently Asked Questions About ULIPs
- 1. Why are ULIPs called dual-natured?
- 2. Are ULIPs expensive?
- 3. Where are the funds invested?
- 4. What is the lock-in period for ULIPs?
- 5. Can I change my choice of funds?
- 6. Is it possible to withdraw funds in the middle of the policy term?
- 7. How much can I withdraw from my fund?
- 8. Do ULIPs have guaranteed returns?
- 9. Can I increase my premium amount in between the policy term?
- 10. What are the maturity benefits available under ULIPs?
Unit Linked Insurance Plans or ULIPs are a popular form of insurance as well as investment. It is this nature of the plan that makes it a beneficial choice for most policyholders. Moreover, the investment component is also incredibly flexible. Not only can you choose the market-linked fund you want to invest in, but also partially withdraw from them as required.
Although ULIPs are frequently sought after, more often than not, there is not much clarity on this type of plan. This leads to multiple queries. If you feel the same and want answers, check out the following list of the 10 most frequently asked questions for ULIPs.
10 Frequently Asked Questions About ULIPs
Complete clarification on all matters related to your insurance plan will help you get the best use out of them. Here are some important matters that you should know, regarding your ULIP.
1. Why are ULIPs called dual-natured?
ULIPs offer insurance-related cover such as life cover and death benefits, as well as investment opportunities in market-related investment funds. Since they offer both facilities, ULIPs are called dual-natured.
2. Are ULIPs expensive?
No, ULIPs are not really expensive. It's just that they have multiple small charges involved. It is perhaps this repeated charging that makes them seem expensive.
3. Where are the funds invested?
As a part of your ULIP, you can choose to invest in any fund from the several options available. There are several funds like equity, debt, cash and more types of funds available.
4. What is the lock-in period for ULIPs?
The lock-in period for ULIPs is 5 years. During this time, you will have to stay invested in the ULIP. You cannot redeem your plan in that period.
5. Can I change my choice of funds?
Yes, ULIPs allow fund-switching. You can switch between the funds anytime after the lock-in period is over.
6. Is it possible to withdraw funds in the middle of the policy term?
Yes, ULIPs have a partial withdrawal facility. Using this, you can withdraw from your funds anytime after the lock-in period, without having to liquidate all of your assets.
7. How much can I withdraw from my fund?
Partial withdrawals of any amount which is less than or equal to 20% of your ULIP fund is allowed. No taxes are levied on withdrawals of such nature.
8. Do ULIPs have guaranteed returns?
The returns from your investments depend on how your fund is performing in the market. This also means that the returns from your plans depend largely on your choice of funds and the risks you are willing to undertake.
9. Can I increase my premium amount in between the policy term?
Yes, you can do this via the top-up feature of ULIPs. Top-up helps you increase your investments.
10. What are the maturity benefits available under ULIPs?
The maturity benefits available under ULIPs dictate that the policyholder shall receive the total fund value on the maturity of the plan.
You may also like to read:
Reasons Why ULIPs Can Help You Save For The Long Term
Insights On ULIPs VS Traditional Life Insurance Plans
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