Compare & Buy Car, Bike and Health Insurance Online - InsuranceDekho
Claim, renew, manage & moreLogin

Types Of ULIP Charges You Must Know About

Published On Oct 27, 2021

A life insurance policy is an excellent investment since it provides both life insurance and an investment-cumulative-savings plan with favorable returns. An investor can plan for his or her family's protection during difficult times as well as some key life events that will occur around the policy's maturity date. While traditional insurance products are beneficial, when the returns are tied to the stock market, they become even more so. Unit-Linked Investment Plans (ULIPs) are exactly that; they combine the best of both worlds while also assisting investors in lowering their tax liabilities. 

A unit-linked insurance plan (ULIP) is a type of life insurance that offers market-linked returns. When you invest in a ULIP in India, you form the habit of saving and investing on a regular and disciplined basis. This is critical for successful long-term investing and achieving life objectives. Because the main feature of ULIPs is market-linked returns, they come with significant dangers, which an investor should be aware of before purchasing one.

Types Of ULIP Charges You Must Know About

If you're considering purchasing a ULIP coverage, here are some frequent charges to be aware of:

1. Premium Redirection Charges

You can direct future premiums to a lower-risk fund without altering the fund or modifying the structure. You will incur additional charges as a result of doing so.

2. Rider Charges

The additional charges are applied whenever an investor adds a rider to a ULIP to gain additional benefits. An investor must pay extra charges, for example, for a critical illness rider on ULIP insurance.

3. Guarantee Charges

If a policyholder chooses guaranteed1 returns, the assurer will levy specified fees to assure the payout. Because ULIPs often provide market-linked returns rather than guaranteed1 returns, they are used. These are used with ULIPs that have a high NAV guarantee.

4. Miscellaneous Charges

Under the category of miscellaneous costs, the assurer imposes a few small fees, such as a small fee if a policyholder desires to modify the premium frequency from half-yearly to annually, and so on.

5. Partial Withdrawal Charges

Investors can prematurely exit the ULIP after the first three years if they need to in an emergency. However, according to the conditions of the policy, early withdrawal carries some penalties.

6. Mortality Charges

These charges are collected by the assurer to provide death insurance to the assured and are calculated after factoring in age, health conditions, and the assurer's mortality table.

7. Switching Charges

Investors are free to switch the fund in which their premium is invested a few times per year. Following the free-limit exhausts, each switch is subject to a charge of between $100 and $500, depending on the terms of the insurance.

8. Fund Management Charges

These fees are capped by IRDAI at 1.5 percent per year and charged as a percentage of the fund value. It's calculated before the NAV, therefore it won't show up in the net asset value.

9. Discontinuance Or Surrender Charges

A discontinuation charge is imposed if the ULIP is terminated prematurely within four years. Surrender charges aren't enforced after the fifth year. The fees, expressed as a percentage of the fund's value and premium, can range from $1,000 to $4,000, depending on the premium. IRDAI lays the groundwork for these fees, which cannot exceed the cost of the acquisition to the assurer.


If you're concerned that these fees may lower your yield, don't sweat; the regulator has set a limit on how much your yield can drop. Decide how much of your income must be put in ULIPs now that you know about all the changes that affect your earnings.

You may also like to read - 5 ULIP Myths Debunked

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.

Popularly Opted Term Insurance Sum Assured

People Also Read

Must BuyMust Buy

Why to Buy Life Insurance Policy Online from InsuranceDekho

  • Tax benefit upto 1,50,000*
  • Claim support everyday 10AM-7PM
  • 50 Lacs+ happy customers
Find the right life insurance for you
By clicking, I agree to *terms & conditions  and privacy policy.
Find the right life insurance for you
By clicking, I agree to *terms & conditions  and privacy policy.