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What Are The Various ULIP Charges You Should Be Aware Of?

Published On Dec 08, 2021

All of us have investment objectives that we wish to accomplish over the period. As a result, people have begun investing early on in life. You should put up a portion of your monthly wage as a prudent trader to achieve the above objectives.

Throughout the last decade, unit-linked insurance plans (ULIPs) have risen in popularity as an opportunity to grow wealth even while offering sum assured. Your ULIP cost of insurance is separated into two parts. The first half of the payment is deposited inside the market, whereas the second half is used to reimburse your insurance.

The returns on ULIP assets are market-linked, therefore they are affected by market circumstances. ULIPs, on the other hand, have a significant advantage over another investing choice in terms of financial versatility. One could mix and match credit, equities, and alternative investments based on your risk aversion. This freedom makes it possible to make prudent financial decisions and to save money on the ULIP earnings in the event of changes in the market.

ULIPs have fees, just like any other investment instrument. We'll go into ULIP charges in great depth in this section.

What Are The Various ULIP Charges You Should Be Aware Of?

It is critical to understand these ULIP expenses before purchasing ULIP coverage:

1. Fund Management Charges

Even the best ULIP funds require meticulous administration. And it takes effort, experience, and caution on our part to manage this situation. As a result, these fees are charged on a daily basis for administering the various fund channels – and are capped at 1.5 percent of the overall fund value every year (as per the directive of the Insurance Regulatory and Development Authority of India). The fund options are divided into two categories: equity and non-equity. They include:

Must Read: How To Buy ULIPs Online in 2021?

  • The Equity Large Cap Fund
  • The Equity Top 250 Fund
  • The Equity Mid-Cap Fund
  • The Managed Fund
  • The Bond Fund
  • The Equity Blue Chip Fund
  • The Gilt Fund

The stock funds have a greater fund management charge (due to the higher risk), whereas the non-equity funds (the Bond Fund and Gilt Fund) have a lower fund management charge (1.25 percent) due to the low to medium risk.

2. Premium Allocation Charges

These fees are paid prior to the ULIP being allocated upon you to cover the insurance company's finances in assigning the plan to you. These expenses comprise insurance underwriting, health checks, and any transaction fees charged by intermediaries. This is accomplished by deducting a fixed percentage of the payments you pay us. It is only payable during the first 5 to 7 years of a ULIP, and the first 2 to 3 years are the most expensive.

3. Premium Relocation Charges

As previously stated, a portion of your ULIP premiums is invested in fund options of your choosing. The funds you select, on the other hand, are not set in stone, and you can swap between them in one of two ways:

  • By making a complete transition from one fund to another.
  • You can pay from one fund to another by redirecting the policy premium.
  • Some insurance companies demand a high relocation fee for this, but with us, you can do it for free and without anxiety.

4. Fund Switching Charges

You have the flexibility to switch funds when your risk appetite and savings goals change with a ULIP investment. Fund switching charges of roughly $50 to $150 per fund move can be incurred after a restricted or defined number of fund switches. An Edelweiss Tokio ULIP investment, on the other hand, allows you to switch funds an unlimited number of times each year at no expense.


One should be conscious of the costs involved with ULIPs while participating in them. This can assist you to get something out of your ULIP and gain a good awareness of your whole investment portfolio. You will also be capable of making an educated selection in order to achieve your investment goals.

Also Read: What Are The Different ULIP Charges That You Must Know About?

 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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