Transparency:

However, ULIPs oIIer a transparent option Ior customers to plan their various liIestage needs
through market-led investments as compared to traditional investment plans.
Insurance cover plus savings
To begin with, ULIPs serve the purpose oI providing liIe insurance combined with savings at
market-linked returns.
To that extent, ULIPs can be termed as a two-in-one plan in terms oI giving an individual the
twin beneIits oI liIe insurance plus savings. This is unlike comparable instruments like a mutual
Iund Ior instance, which does not oIIer a liIe cover.
Multiple investment options
ULIPs oIIer a lot more variety than traditional liIe insurance plans. So there are multiple options
at the individual's disposal. ULIPs generally come in three broad variants:
ggressive ULIPs (which can typically invest 80-100 in equities, balance in debt)
alanced ULIPs (can typically invest around 40-60 in equities)
onservative ULIPs (can typically invest up to 20 in equities)
lthough this is how the ULIP options are generally designed, the exact debt/equity allocations
may vary across insurance companies. Individuals can opt Ior a variant based on their risk
proIile.
For example, a 30-year old individual looking at buying a liIe insurance plan that also helps him
build a corpus Ior retirement can consider investing in the alanced or even the ggressive
ULIP.
lexibility
Individuals may well ask how ULIPs are any diIIerent Irom mutual Iunds. Iter all, mutual
Iunds also oIIer hybrid/balanced schemes that allow an individual to select a plan according to
his risk proIile.
The diIIerence lies in the Ilexibility that ULIPs aIIord the individual. Individuals can switch
between the ULIP variants outlined above to capitalise on investment opportunities across the
equity and debt markets. Some insurance companies allow a certain number oI 'Iree' switches.
This is an important Ieature that allows the inIormed individual/investor to beneIit Irom the
vagaries oI stock/debt markets. For instance, when stock markets were on the brink oI 7,000
points (Sensex), the inIormed investor could have shiIted his assets Irom an ggressive ULIP to
a low-risk onservative ULIP.
Switching also helps individuals on another Iront. They can shiIt Irom an ggressive to a
alanced or a onservative ULIP as they approach retirement. This is a reIlection oI the change
in their risk appetite as they grow older.


0Ifferent funds offered by ULIP

CeneraI 0escrIptIon Nature of Investments PIsk Category
EquIty funds nvestIng In companIes stock. |edIum to hIgh
ncome, fIxed deposIts
E bond funds
nvestIng In Covernment
securItIes E In corporate bonds.
|edIum
Cash Funds
nvestIng In cash, bank deposIts
E money market
Low
8alanced Funds
CombInatIon of equIty
InvestmentE fIxed Interest
Instruments
|edIum

dvantages of takIng ULIP

O !rovIde lIfe cover.
O %ax savIng under 80CC.
O t also gIves you opportunIty to Invest In stockmarket.
O CIves you the optIon of long term Investment too.

asIc Charges on ULIPs
O !remIum AllocatIon Charges t normally Includes InItIal E
renewalexpenses apart from commIssIon expenses.
O |ortalIty Charges %hIs charge Is provIded for the Cost of nsurance
Coverageunderthe plan. A lot of factors are responsIble for mortalIty
charge lIke age, amount of cover etc.
O Fund |anagement Fees %hese are fees levIed for management of the
funds and are deducted before arrIvIng at the Net Asset 7alue(NA7)
O !olIcy/AdmInIstratIon Charges %hese are the fees for admInIstratIon
of the plan and levIed by cancellatIon of unIts. %hIs could be flat
throughout the polIcy term or vary at a predetermIned rate.
O $urrender 7alue Charge A surrender charge may be deducted for
premature partIal or full encashment of unIts wherever applIcable, as
mentIoned In the polIcy condItIons.
O Fund $wItchIng Charges LImIted fund swItchIng charges may be
allowed every year.
O $ervIce %ax 0eductIon8efore allotmentof the unIts the applIcable
servIce tax Is deducted from the rIsk portIon of the premIum.

%hIngs to remember before goIng for a ULIP
O nvest for a long termA long term Investment wIll gIve you good
results.
O 8e sure about the charges |ake sure about the charges that the
company wIll take from you. %here should not be any hIdden cost.
O nvest at your own rIsk nvestIng In UL! Is also rIsky, you should
check your rIsk appetIte before InvestIng.