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In this policy, the investment risk in the investment portfolio is borne by the policyholder.

ULIP Plans FAQs

Unit-Linked Insurance Plans (ULIPs) combine investment and insurance, giving you the advantage of market-linked returns while ensuring financial protection for your family. They offer flexibility in fund selection and investment strategies. Here’s a comprehensive list of frequently asked questions to help you understand ULIP plans.

FAQs About ULIP Plan

Here's a list of FAQs about ULIP

1 What are New Age ULIPs?

New Age Unit Linked Insurance Plans (ULIPs) charge lower fees and come with modern and distinguishing features. New Age ULIPs also provide multiple options for allocating assets to maintain portfolio risk and safeguard returns from equity funds.

2 What are some common myths about ULIPs?

Many people feel that ULIPs are riskier and expensive investments with low returns, which is not the case. Some believe that there are hidden charges involved and that they lack flexibility. But in reality, ULIPs are less expensive and offer diversified investment options. They provide tax benefits with comprehensive life coverage while enabling wealth creation in the long run.

3 What is a low-cost ULIP, and why would you invest in it?

A low-cost ULIP is associated with lower premium allocation fees and other charges. By investing in these ULIP plans, you can maximise returns while availing tax benefits and comprehensive life coverage. These plans are, however, ideal for the creation of wealth in the long term and provide opportunities for investment in different funds depending on your financial goals.

4 What is the lock-in period of a ULIP?

The lock-in period applicable for a ULIP plan is five years. During this time frame, you are not allowed to withdraw your investment without incurring penalties, as instructed by the Regulatory.

5 Which is a ULIP?

A ULIP is a life insurance product that is a combination of both insurance and investment. Policyholders with a ULIP plan can invest in equities, debt securities, and balanced funds while providing comprehensive life coverage. ULIP helps to create and build wealth over time, provides tax benefits, and provides financial assistance for family members in case of any sudden death.

6 When is the right time to invest in a ULIP?

Similar to other mutual fund investments, you can invest in ULIP anytime. ULIPs are volatile like any other market-linked investments. Considering this, it is ideal to invest in a ULIP plan when the market is down. ULIPs are suitable for achieving long-term goals such as child education, retirement, and wealth creation.

7 Can I buy ULIP plans online?

Yes, you can purchase most ULIP plans online by visiting the respective websites of the insurance company providing the plan. The online application of ULIP involves low charges and allows for the easy comparison of plans. This online process is quicker and more hassle-free, with minimal paperwork needed.

8 What are the eligibility criteria for ULIPs?

The minimum age applicable for purchasing most ULIP policies is 18 years. However, the maximum age can vary, usually around 65 years. Alongside this, ULIPs have a requirement of minimum annual income, ensuring that policyholders are capable of meeting the payments of premiums on time.

9 Are ULIP plans risky investments?

Yes, ULIP plans are risky investments as the returns have a direct link with the market. This means the ULIP plans fluctuate according to market performance, and the policyholder needs to bear this investment risk. Thus, carefully assessing your risk appetite is essential before proceeding to invest in a ULIP plan.

10 How do I file a claim on my ULIP?

To file a claim on your ULIP account, submitting all relevant documents, including the death certificate of the policyholder or policy documents, is mandatory. After this, make sure to contact the insurer, fill out the claim form, and provide relevant bank details with valid identity proof. Upon verification, the insurer will proceed to process the claim and pay the sum assured amount.

11 What are the disadvantages of ULIP?

When opting for a ULIP plan, certain restrictions could apply on accessing funds before maturity, thereby leading to financial stress during times of emergencies. Alongside this, ULIP plans may levy multiple charges such as fund management charges, allocation of premium charges, guarantee charges, and others, which lowers the return on your investment.

12 What happens if ULIP is not paid?

If you do not pay premiums for ULIP investment, you will be provided with a grace period of about 30 days. If the premiums are still not paid, the required fund value after deducting the discontinuance charges gets credited to a discontinued fund with low returns. You are, however, eligible to withdraw the required amount after five years.

13 Is the ULIP refund taxable?

Whether the ULIP refund is taxable depends entirely on the premium amount and date of purchase. If you have paid a ULIP premium of below Rs. 2.5 Lakh for purchasing policy on or after 1^stFebruary, 2021, your ULIP plan is completely tax-free¹.

14 What if I don't pay the premiums of my ULIP?

If ULIP premiums are not paid, you will receive a grace period for paying your premiums. After this, the policy will be discontinued, and your beneficiaries will not be able to receive life insurance coverage. Alongside this, you will also not be able to claim deductions in taxes.

15 What are the charges of a ULIP?

The different charges included in a ULIP plan are guarantee charges, partial withdrawal penalties, premium redirection charges, switching of fund charges, rider charges, discontinuance of premiums charges, top-up charges, fund management charges, allocation of premium charges, mortality charges, surrender charges, policy administration charges, and others.

16 What is the interest rate of a ULIP?

There is no fixed rate of interest applicable for ULIP plans because they invest in debt, equities, and hybrid funds whose returns are linked to the market. Returns, thus, vary according to performance in the market and selection of funds. Over the long run, ULIPs, however, provide attractive returns in comparison with fixed deposits or other insurance plans.

17 How does a ULIP work?

A portion of the premiums paid for the ULIP plan is used to provide comprehensive life coverage, while the other portion is used to invest in equity and debt funds, considering your choice. During any unfortunate event, your nominee is eligible to receive the death benefits or the fund value of the ULIP plan, whichever is more. And if you survive during the policy tenure, you are eligible to receive the entire fund value as a maturity benefit.

18 Are ULIPs suitable for the long term?

Yes, ULIPs are ideal for meeting long-term goals such as meeting the education expenses of your child, wealth creation, retirement savings, and so on. They offer the benefits of switching fund options and compounding features. Continuing to invest in the ULIP plan for 10 to 15 years helps in maximising returns while providing tax benefits and life coverage options.

19 When can I withdraw from a ULIP?

You can withdraw from your ULIP plan after the lock-in period of five years. After this period, partial withdrawals are allowed. Withdrawal of funds at an early period impacts long-term growth. Thus, it is beneficial to continue investing for a longer period to yield higher returns.

20 What is NAV in ULIP?

NAV is the value of assets based on per unit value minus the total liabilities of the investment fund. This value is crucial for tracking the performance of your fund. It is usually calculated on a daily basis, considering the fund's performance and market fluctuations. The NAV value shows how well the fund has performed in the past years.

21 Is ULIP a short-term or long-term saving option?

ULIP is a long-term savings option that provides dual benefits of savings and investment for fulfilling your long-term goals along with comprehensive life coverage. The latter protects your family members financially in the event of your death. You might be eligible for withdrawal after five years, but you can stay invested for 10 to 15 years to yield maximum returns through the power of compounding.

22 How is a ULIP different from traditional plans?

The main difference between ULIP and traditional plans lies in its structure. ULIP is a combination of insurance and market investments that yields higher returns and flexibility. Whereas traditional plans are focused on savings, guaranteeing fixed returns and income stability over the period.

23 How can I calculate the NAV of ULIP?

NAV of a ULIP is calculated considering the below-mentioned formula:

NAV = (Market value of investments + Current assets) – (Value of current liabilities)/Total number of outstanding units on date

The NAV value of assets keeps on changing, considering the performance of market-linked funds invested in. With improvements in the performance of the underlying fund, the NAV value of your ULIP plan will increase and vice versa.

24 Do ULIP plans give any maturity benefits?

Yes, there are maturity benefits associated with every ULIP plan, which is equal to the fund value that prevails at the end of policy tenure. This amount, however, varies with the market performance and funds you have chosen. The death benefits provided under the ULIP Plan upon maturity are exempted from taxes under Section 10(10D) of the Income Tax Act, 1961¹.

Disclaimer

1. Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions. Tax Laws are subject to change from time to time. Customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law.

In unit linked policies, the investment risk in the investment portfolio is borne by the policyholder. The Unit Linked Insurance products do not offer any liquidity during the first five years of the contract. The policyholders will not be able to surrender/withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of fifth year.

Life Insurance Coverage is available in this product. The unit linked insurance products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender/withdraw the monies invested in unit linked insurance products completely or partially till the end of fifth year. Unit Linked Funds are subject to market risks and there is no assurance or guarantee that the objective of the investment fund will be achieved. The premium shall be adjusted on the due date even if it has been received on advance.

Unit Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. The name of the company, name of the brand and name of the contract does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your insurance agent or the intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

ARN: ED/02/25/21886

For NRI Customers

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Call (All Days, Local charges apply)

Email ID

Whatsapp

(If you're our existing customer)

Call (Mon-Sat, 10am-9pm IST, Local Charges Apply)

Email ID

For Online Policy Purchase

(New and Ongoing Applications)

Call (All Days & Toll free)

Schedule a call

Whatsapp

Give missed call to buy a policy

Email

Branch Locator

Locate a branch

For Existing Customers

(Issued Policy)

Whatsapp

Call (Mon to Sat, from 10 am to 7 pm, Call charges apply)

Email

Fund Performance Check

Call (Missed Call)

ULIP Plans FAQs

FAQs About ULIP Plan