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How to Choose the Best ULIP Plan in India?

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How to Choose the Best ULIP Plan in India?
December 12, 2023

Table of Content

 

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

A ULIP is the acronym that stands for a Unit Linked Insurance Plan. In contrast to a regular life insurance scheme, a ULIP serves a dual purpose - that of life insurance cover and investment under a single policy. The premium that you would pay towards the maintenance of a ULIP is split to provide you life insurance coverage on the one hand, and investment in your opted-for securities on the other. In the invested part of your ULIP, you have the choice to invest in equity, debt, or opt for a balanced hybrid investment plan.

If you wish to select the best ULIP plan in India, one that matches your unique financial goals, this is how to go about it:

  • Choose a ULIP according to your own financial objectives
  • Select an appropriate amount of life insurance coverage
  • Remain invested for a long term
  • Be aware of any charges with the plan before you invest (premium charges, management charges, etc.)
  • Know about any benefits you get with regard to taxation
  • Note the features of different ULIPs

How do ULIPS work?

The working of the best ULIP plan in India is simple. You have to pay the premium due for any ULIP, while various other investors also invest in the same ULIP. The provider of the ULIP then collects this amount and invests it in any securities you have opted for (a fund). Before investing your capital in your chosen fund, insurance providers deduct any fees pertaining to the ULIP. The fund in which your money gets invested could be equity-based, balanced or debt-based. The total corpus is then split into units having a particular face value.

The insurance provider of the said ULIP will then allocate specific units to each investor in relation to the capital invested. The value of the units is known as the net asset value (NAV). With a ULIP, insurance providers have fund managers who operate and keep track of the funds contained in the plan. Depending on how the markets perform, the net asset value in a ULIP either increases or decreases.

If you want to opt for the best ULIP plan in India, you should select one that gives you a sufficient maturity amount that meets your needs. When a ULIP matures, your plan provider will give you the fund value based on the value of your invested securities in the market. In case of the unforeseen demise of a policyholder, the payment of the fund value or assured sum (whichever is the highest) is paid to nominees.

ULIPs Lock-in Period and Charges

ULIP plans have a period of lock-in, and this is five years. What this means is that you cannot withdraw from a plan before this mandatory period has elapsed. On ULIPs, certain charges and fees are levied, and these are:

  • Charges for Fund Management
  • Charges for Administration of the Policy
  • Charges for Plan Surrender
  • Charges for Mortality
  • Charges for Plan Discontinuation
  • Charges for Fund Switching

What is NAV in ULIPs?

In the best ULIP plan in India, the NAV (net asset value) of the plan translates to the unit or price of any given ULIP. By paying the premium applicable to a ULIP, you are buying units of a particular scheme. The price for each unit of a ULIP is the NAV of the ULIP.

Eligibility Criteria to Buy ULIPs

In order for you to sign up for a ULIP, you have to be able to fulfill certain criteria for eligibility. This is explained below:

  • Every ULIP has a stipulated age of entry, and this must be fulfilled while applying.
  • You must be able to adhere to the mode of premium payment according to the plan.

Required Documents for ULIPs

To prove that you are eligible to purchase the best ULIP plan in India, you have to submit the following documents to your insurance provider:

Sr. No Documents Identity Proofs Address Proofs
1 Passport Y Y
2 Voter’s Identity Card issued by Election Commission of India Y Y
3 Permanent Driving License Y Y
4 Aadhaar Card Y Y
5 Central KYC Identifier (can be accepted, if the downloaded documents are from the list of Officially Valid Documents (OVD) reflecting across Sr. No. 1 to 4 and there is no change in the address basis the document downloaded from Centralized KYC Registry (CKYCR) database as mentioned on the proposal form) Y Y

Please check detailed List of KYC Proofs here - https://www.hdfclife.com/customer-service/list-of-kyc-proofs

Reasons to Purchase ULIPs

You should buy a ULIP for the following reasons:

  • Benefits of Liquidity

    After the mandatory five-year lock-in period, the best ULIP plan in India can be liquidated if you opt for it. There is also the choice for you to make withdrawals partially once the lock-in tenure is completed.

  • ULIPs are Transparent

    Investors get total transparency with ULIPs. You are informed of any charges via the policy, and made aware of various kinds of funds to invest in, plus the number of units allocated in a fund.

  • Low Surrender Charges

    In the event you wish to surrender a ULIP, you may do so after the mandatory lock-in term is over. Nonetheless, if you wish to surrender a policy before the lock-in phase, you can do so by paying nominal surrender charges.

  • Life Coverage

    ULIPs offer you life insurance with an investment option. This gives a boost to your wealth and safeguards your dear ones.

  • Customized Plans

    The best ULIP plan in India can be tailor-made to match your individual requirements. You can switch funds if you discover that you need changes.

  • Savings for the Future

    Through a ULIP, saving for the long run is possible. Instead of putting this off, as you normally would, a ULIP takes the long term into consideration and compels you to build funds for future needs.

Bottom Line

After you grasp the importance of what the best ULIP plan in India can offer you, you will be encouraged to invest in one. One thing to note with any life insurance plan you opt for is to read the policy document thoroughly and get a clear understanding that a plan is suited to you in the best possible way.

ARN - ED/09/22/29484

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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Disclaimer

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 or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of fifth year.

For more details on risk factors, associated terms and conditions and exclusions please read sales brochure carefully before concluding a sale. 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. HDFC Life Insurance Company Limited is only the name of the Insurance Company, The name of the company, 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.

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