Securing Hannav Ledger...
Securing Hannav Ledger...
Glossary
Unit Linked Insurance Plan combines life insurance cover with market-linked investments, with premiums partially allocated to funds and charges.
ULIP is insurance plus investment in one product — part of premium buys life cover, rest goes to market funds.
Charges include premium allocation, fund management, mortality, and discontinuance. Lock-in 5 years. Fund switches allowed. Returns depend on equity/debt fund choice. Often costlier than separate term plan plus mutual fund combination.
₹1 lakh annual ULIP premium: ₹5,000 mortality charge, ₹8,000 allocation charge, ₹87,000 invested in equity fund. After 10 years at 10% net return, fund value ~₹12 lakh with ₹10 lakh sum assured.
Separate term plan plus direct MF usually offers higher cover and lower costs. ULIP suits those wanting bundled product despite higher charges.
No. Market-linked funds can lose value. Only sum assured (life cover) is guaranteed subject to policy terms and premium payment.
Surrender before 5 years attracts discontinuance charges and move to discontinued policy fund. After 5 years, surrender with lower charges.