Some points about ULIPS:
1. ULIPS IS NOT NEW TO US. ULIPS CAME IN TO PLAY IN 1960 AND IS POPULAR IN MANY COUNTRIES IN THE WORLD TODAY.
2. IN 1971 THE UNIT TRUST OF INDIA OFFERED THE UNIT LINKED INSURANCE PLAN. OUT OF INSURANCE PREMIUM A SMALL PART OF CONTRIBUTION WAS UTILIZED FOR PROVIDING LIFE COVER AND BALANCE INVESTED IN UNITS.
3. ULIPS ALSO KNOWN AS UNBUNDLED PLANS BECAUSE IT IS EASY TO FIND THAT, WHAT ARE MY CHARGES AND HOW MUCH MY AMOUNT IS GROWING ETC.
4. UNIT LINKED GUIDELINES NOTIFIED BY IRDA ON 21ST DECEMBER, 2005 IN INDIA. THE MAIN INTENT OF THE GUIDELINES WAS TO ENSURE THAT THEY LEAD TO GREATER TRANSPARENCY AND UNDERSTANDING OF THESE PRODUCTS AMONG THE INSURED, ESPECIALLY SINCE THE INVESTMENT RISK IS BORNE BY THE POLICYHOLDER.
2. IN 1971 THE UNIT TRUST OF INDIA OFFERED THE UNIT LINKED INSURANCE PLAN. OUT OF INSURANCE PREMIUM A SMALL PART OF CONTRIBUTION WAS UTILIZED FOR PROVIDING LIFE COVER AND BALANCE INVESTED IN UNITS.
3. ULIPS ALSO KNOWN AS UNBUNDLED PLANS BECAUSE IT IS EASY TO FIND THAT, WHAT ARE MY CHARGES AND HOW MUCH MY AMOUNT IS GROWING ETC.
4. UNIT LINKED GUIDELINES NOTIFIED BY IRDA ON 21ST DECEMBER, 2005 IN INDIA. THE MAIN INTENT OF THE GUIDELINES WAS TO ENSURE THAT THEY LEAD TO GREATER TRANSPARENCY AND UNDERSTANDING OF THESE PRODUCTS AMONG THE INSURED, ESPECIALLY SINCE THE INVESTMENT RISK IS BORNE BY THE POLICYHOLDER.
5. IT IS A MARKET LINKED INVESTMENT WHERE THE PREMIUM PAID IS INVESTED IN FUNDS
6. DIFFERENT OPTIONS ARE AVAILABLE, LIKE 100% EQUITY, BALANCED, DEBT, LIQUID ETC AND ACCORDING TO THE FUND SELECTED, THE RISKS AND RETURNS VARY.
FAQs on ULIPS
1. What is a ULIP?
1. What is a ULIP?
ULIP is an abbreviation for Unit Linked Insurance Policy. A ULIP is a life insurance policy which provides a combination of risk cover and investment. The dynamics of the capital market have a direct bearing on the performance of the ULIPs. REMEMBER THAT IN A UNIT LINKED POLICY, THE INVESTMENT RISK IS GENERALLY BORNE BY THE INVESTOR.
2. What is a Unit Fund?
The allocated (invested) portions of the premiums after deducting for all the charges and premium for risk cover under all policies in a particular fund as chosen by the policy holders are pooled together to form a Unit fund.
3. What is a Unit?
It is a component of the Fund in a Unit Linked Policy.
4. Are Investment Returns Guaranteed in a ULIP?
Investment returns from ULIP may not be guaranteed.” In unit linked products/policies, the investment risk in investment portfolio is borne by the policy holder”. Depending upon the performance of the unit linked fund(s) chosen; the policy holder may achieve gains or losses on his/her investments. It should also be noted that the past returns of a fund are not necessarily indicative of the future performance of the fund.
5. What are the Charges, fees and deductions in a ULIP?
ULIPs offered by different insurers have varying charge structures. Broadly, the different types of fees and charges are given below. However it may be noted that insurers have the right to revise fees and charges over a period of time.
A. Premium Allocation Charge
This charge normally includes initial and renewal expenses apart from commission expenses.
This charge normally includes initial and renewal expenses apart from commission expenses.
B. Mortality Charges
These are charges to provide for the cost of insurance coverage under the plan.
C. Fund Management Fees
These are fees levied for management of the fund(s) and are deducted before arriving at the Net Asset Value (NAV) .
D. Policy/ Administration Charges
Fees for administration of the plan and levied by cancellation of units.
E. Surrender Charges
A surrender charge may be deducted for premature partial or full encashment of units wherever applicable, as mentioned in the policy conditions.
F. Fund Switching Charge
Generally a limited number of fund switches may be allowed each year without charge, with subsequent switches, subject to a charge.
G. Service Tax Deductions
Before allotment of the units the applicable service tax is deducted from the risk portion of the premium.
6. What should one verify before signing the proposal?
One has to verify the approved sales brochure for
• all the charges deductible under the policy
• payment on premature surrender
• features and benefits
• limitations and exclusions
• lapsation and its consequences
• other disclosures
• Illustration projecting benefits payable in two scenarios of 6% and 10% returns as prescribed by the life insurance council.
Insurance companies never cheats, your agent can missguide you. Please read carefully your policy document and If you finds that you have cheated by agent, you can return this policy to company with in 15 days after receiving policy documents and you will get your invested money back, this called free lookin period.
Please visit our page New ULIPs Regulation for new guidlines of IRDA for ULIPs.
6. What should one verify before signing the proposal?
One has to verify the approved sales brochure for
• all the charges deductible under the policy
• payment on premature surrender
• features and benefits
• limitations and exclusions
• lapsation and its consequences
• other disclosures
• Illustration projecting benefits payable in two scenarios of 6% and 10% returns as prescribed by the life insurance council.
Insurance companies never cheats, your agent can missguide you. Please read carefully your policy document and If you finds that you have cheated by agent, you can return this policy to company with in 15 days after receiving policy documents and you will get your invested money back, this called free lookin period.
Please visit our page New ULIPs Regulation for new guidlines of IRDA for ULIPs.
