A unit linked insurance plan is a twin benefit plan of insurance and investment.
Mortality charges: These are paid out of your premiums. This is used for the insurance benefits .To pay your death benefits or claims.
Fund managers fees: A manager is appointed to run the Ulip by the AMC or the asset management firm. This manager invests your premium in stocks/shares so that you can get an increase in value on your units. He charges a fee for these services called fund managers fees.
Administrative expenses: These fees are charged out of the premiums you pay and are used for the day to day administration and other costs of the fund.
NAV = Assets of the fund – Liabilities of the fund
Number of outstanding subscribers
Assets of the fund: The investments of the fund mainly the premiums you and other people pay for entry into the scheme.
Liabilities of the fund: The redemptions you and other people redeem or quit from the fund.
Number of the outstanding subscribers means all the investors who are invested in the Ulip.
The lock in period of the Ulip is for a period of 3 years. You cannot exit/surrender the policy and have to pay the premiums for at least 3 years.
If you stop paying your premiums after the first year then you do not get back any amount from the policy.
There are two types of Ulips. Type 1 and Type 2 Ulips:
In type 1 Ulips you will get either the sum assured or the fund value (Value of the units you possess) whichever is higher if you die before the maturity of the policy.
In type 2 Ulips you will get both ( Sum assured as well as the fund value) if you die before the maturity of the policy. You have to pay a higher premium for the type 2 Ulips.
The premiums you pay are tax deductible as per Section 80 C of the income tax act.
The maturity amount (The amount you get on the maturity of the policy) is tax free under Section 10 10(d) of the income tax act.
The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.
Subscribe to our Youtube Channel