RESUME APPLICATION PAY PREMIUM
Fund Performance

Fund Performance

Knowledge Center

Knowledge Center

About Us

About Us

Tools and Calculators

Tools & Calculators

Quick links

Mobile (Download app)
  • Webpages
  • Documents
  • HDFC Life ClassicAssure PlusInvestment
  • HDFC Life ClassicAssure PlusInvestment
  • HDFC Life ClassicAssure PlusInvestment

For NRI Customers

(To Buy a Policy)

(If you're our existing customer)

For Online Policy Purchase

(New and Ongoing Applications)

Branch Locator

For Existing Customers

(Issued Policy)

Fund Performance Check

RESUME APPLICATION PAY PREMIUM

What do you want to do?

Quick links

Mobile (Download app)

Download HDFC Life App

Buy plans, track your policy, make renewal payments & monitor fund performance with HDFC Life App, Download Now!

Apple Logo Go to Google Play Store

10 Most Frequently Asked Questions about ULIP

down-arrow
August 03, 2023

Table of Contents

 

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

When it comes to long-term investments, Unit Linked Insurance Plan (ULIP) has become quite a popular choice these days for the high returns they generate. As a result, more and more people are curious to know about the plan and all the relevant details to get full clarity on how beneficial it can be for their financial goals. Following are the ten most commonly asked questions regarding ULIP investment and the respective answers.

1. What is ULIP?

Unit Linked Insurance Plan is a financial instrument that doubles up as life insurance as well as an investment opportunity. The premium you pay for your ULIP investment is divided into two parts— one goes to form the life cover while the other is invested in equities, debt funds or a mix of the two.

2. What is a Unit?

The ULIP investment you make is divided into a set of individual parts. Each of them is called a unit.

3. What is NAV?

Net Asset Value (NAV) in ULIP is the price of each unit of the fund. It’s calculated in rupees.  

4. What do you get as a death benefit in ULIP?

The amount of the death benefit in ULIP investment varies according to the nature of the policy. The ULIP plan is available in 3 categories of premium payment: Single pay (One-time premium payment), Limited Pay (Premium is paid for a certain period) and Regular Pay (Premium paid regularly till maturity). The amount payable in case of the untimely demise of the policyholder varies accordingly.

For Single pay: The death benefit is the highest of

a. Sum assured including top-ups (if any) and deducting the partial withdrawal amounts (if any)

b. Fund value including top-up (if any)

c. Minimum death benefit amount specified in the policy

For Limited or regular pay: The death benefit is

  • For entry age less than 50 years, higher of (A+B) or C
  • For entry age equal to or greater than 50 years, the highest of A, B or C

5. What is the maturity benefit of ULIP?

The maturity benefit in the ULIP investment is the total fund value created at the time of maturity of the policy.

6. Does ULIP allow withdrawals? 

ULIP has a lock-in period of five years, as set by the Insurance Regulatory and Development Authority of India (IRDAI). Post that period, withdrawals are allowed from your ULIP investment but the yearly amount should not exceed 20% of the fund value.  

7. What is a fund switch?

A ULIP investment offers the policyholder to switch funds and restructure his portfolio according to his changing risk appetite and financial needs. If he is a risk taker looking to get high returns, investment can be made in equities only. Now if over time he prefers catering to low risk and achieving guaranteed returns, the policyholder can switch his investment completely from equities to debt funds or fixed interest schemes or can opt for a combination of debt bonds and equities. Insurers allow this fund to switch for a fixed number of times a year, beyond which a charge is payable. Some insurers are offering unlimited switches too.

8. What is a premium redirection?

Like a fund switch, a premium redirection is another flexibility offered by ULIP investments. In the course of the policy, you can choose to allocate your future premiums in a new fund, while the older premium remains invested in their older fund locations. So, you redirect your premium here.

9. Are there tax benefits in ULIP?

Yes, ULIP investment offers tax benefits like any other insurance plan. Here the death benefit is tax-free under section 10(10D) of the Income Tax Act 19611 while the maturity benefit is also eligible for tax exemption subject to the same section. Besides premium payments up to Rs 1.5 lakhs per annum are exempted from tax under section 80C. 

10. Can I surrender the policy before the lock-in period is over?

Yes, surrendering the policy is allowed within the lock-in period with a charge deducted. But the policyholder will receive the money only after the five-year period is over. In the meantime, the investment amount will be kept in the Discontinued Policy Fund at 4% interest. 

Related Articles:

ARN - ED/07/23/3262

Term Plan Articles Term Plan Articles

Investment Articles Investment Articles

Savings Articles Savings Articles

Life Insurance Articles Life Insurance Articles

Tax Articles Tax Articles

Retirement Articles Retirement Articles

ULIP Articles ULIP Articles

Health Plans Articles Health Plans Articles

Child Plans Articles Child Plans Articles

Popular Calculators Popular Calculators

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.

LinkedIn profile
Author Profile Written By:
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.

LinkedIn profile
Reviewed By Reviewed By:

Here's all you should know about life insurance.

We help you to make informed insurance decisions for a lifetime.

Preserving Your Investment: How New Tax Rules Affect Real Estate Sales Before 2024

Preserving Your Investment: How New Tax Rules Affect Real Estate Sales Before 2024

Discover how new tax rules affect real estate sales before 2024, impacting capital gains, deductions, and property transactions. Stay informed for smarter decisions.

Financial Freedom for Women Entrepreneurs: Unlocking Success with the 50-30-20 Strategy

Baby Steps to a Secure Future: Financial Planning and Wealth Management

Charting New Beginnings: Financial and Mental Well-being for Single Parents

Essential tips and strategies for enhancing both financial and mental well-being for single parents, empowering you to thrive and support your family.

Charting New Beginnings: Financial and Mental Well-being for Single Parents
Monthly Saving Made Simple: How Much Should You Save? Previous
Scared to take investment risks? ULIP can still be your pick! Next
HDFC life
HDFC life

HDFC Life

Reviewed by Life Insurance Experts

HDFC LIFE IS A TRUSTED LIFE INSURANCE PARTNER

We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.

Disclaimer

1. Subject to conditions specified u/s 80C of the Income tax Act, 1961.

The afore stated views are based on the current Income-tax law. Also, the 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.

Popular Search

Popular Searches