life insurance company
Unit Linked Insurance Plans

ULIP Plans

Introduced by Union Trust of India in the year of 1971, the Unit Linked Insurance Plan (ULIP) comes with the benefits of both investment and insurance plans. One of the premiums paid to this plan is used to avail of the benefits of the cover and the rest of the amount can be invested in qualified investments options such as stocks, bonds, mutual funds, and so on. These plans help you to build a corpus that will generate a regular flow of income in your post-retirement days.

One can customize the plan according to his/her convenience as this is a comparatively transparent and flexible plan. In this plan, the investments that are made by the insured people, are subject to the risks of the capital market and that risk has to be borne by the policyholder. The ULIP plans offer the insurers to switch their investment from debt to equity and vice-versa without paying any charges for that.

Why Should You Opt for a ULIP Plan?

The ULIP plans are an important investment and insurance plans that are necessary for everyone to safeguard himself and his dearer ones. Below, here are some reasons why you should invest in a ULIP plan.

  • Financial security and higher returns: If you invest for a longer period of time, you can expect higher returns from ULIP plans as you will be offered different fund options to invest your money such as equity funds, balanced funds, debt funds, and some more. Usually, a ULIP plan offers 12% to 15% returns for a policy period of 10 years thus safeguarding your future financially. You are also eligible to switch among the funds to get higher returns from the amount invested by you.
  • Entry age: The younger you are, the more returns you can enjoy over the period of time. Most of the ULIP plans allow you to start your investment from the age of 18 years, though the entry age might vary from one insurer to another. If you start planning for your ULIP plan from a younger age, the returns will be higher and you can avail of the benefits for a longer period of time.
  • A wide array of fund options: In which fund you want to invest that is totally up to you. You will be given a wide range of fund options to choose from according to your convenience. On the basis of your future needs, risk-taking ability, financial condition you can choose and also can switch among the plans to get maximum returns.
  • Hassle-free and easy to invigilate: Once you opt for a ULIP plan, you do not have to monitor the stocks every day. The insurance company and its expert fund management team will continuously keep an eye on the capital market on behalf of you. Additionally, you can also monitor your portfolio just by using different simple tools such as the ULIP NAV.
  • Lucidity and transparency: The ULIP plans are an extremely transparent insurance and investment plan where all the information including the various charges are shared with you whereas in the case of traditional plans you cannot avail of this facility. You can also monitor your portfolio using different tools such as ULIP NAV.
  • Flexibility: The ULIP plan is flexible enough to give the choice to select from a wide array of fund options to invest your money. Also, popular insurance companies come with multiple rider options to choose from to enhance your plan’s benefits.
  • Liquidity: This is one of the many reasons why you should go for a ULIP plan. You can do partial withdrawals according to your requirements to meet any financial emergency. As you can monitor your portfolio easily, you can easily align the insurance and investment cover with the overall risks and thus can prepare yourself for the upcoming financial need.
  • Comparatively lower surrender charges: If someone finds that the current plan is no longer suitable for him, he can surrender the policy. In that case, he has to pay the surrender charges. For the traditional plans, the surrender charges are very high that leaves one with a very small amount of money that was invested at the time of exit, but for the ULIP plans, it is relatively lower.

What Are The Key Features/Benefits of ULIP Plans?

A ULIP plan comes with different benefits. Some of the important mentions are as follows.

  • Long-term Gain: ULIP plans come with the benefits of both investment and insurance plans. As the insured person can invest in different funds, he/she is entitled to receive market-linked returns and thus can safeguard himself and his family financially.

  • Market Linked Returns: A part of the premiums paid to the plan is invested in different types of funds such as debt fund, equity fund, and so on. The insured person can even avail of the returns on the basis of the capital market. One can keep an eye on his/her portfolio using ULIP NAV to know about the investments, returns and stay invested in the most suited ULIP plan.

  • Double Benefits: Under the ULIP plan, one can avail of dual benefits such as investment and insurance benefits. This denotes that one can get the benefits of life cover on the basis of his/her choice and can also enjoy the market-linked returns.

  • Death Benefits: In case of the unfortunate demise of the proposer during the policy term, the beneficiary is entitled to receive the amount either sum insured or the fund value, whichever is higher.

  • Tax Exemption Benefit: If one has planned his ULIP plan wisely, he/she can enjoy the tax benefits as per the Income Tax Act of India, 1961.

  • Maturity Benefit: If the insured person meets the maturity age of the plan, he/she can avail of the maturity benefits that may vary from one insurer to another.

  • Partial Withdrawal Benefits: The insurance companies allow the insured person to withdraw a certain amount of money as per his/her requirements to meet the financial emergencies. Usually, these withdrawals are tax-free.

  • Long-term Investment Benefits: It is wise to invest in a ULIP plan at a young age as the younger you are, the higher returns you are able to gain. The ULIP plans are affected by the fluctuations of the capital market and that has to be borne by the insurer only. So, in the case of short-term policy, you might not gain the maximum benefits but if you opt for a long-term ULIP plan, you can easily enjoy the maximum returns from your investments.

Best ULIP Plans in India in 2021

Due to the rising popularity of ULIP plans, a wide array of insurance companies has come up with ULIP Plans with varied benefits to cater to the needs of different individuals. But, the policy-seekers become confused about which company is best suited for them. To lighten your burden, here is a table containing the top-most ULIP plans in 2021 along with the eligibility criteria that are available in India. Among the vast numbers of ULIP plans, the following are just the hand-picked ones, which are most popular among the policyholders.

Plan nameCompany nameEntry ageMaturity ageNumber of free switches in a yearPolicy termpremium amount (Annually)
Bajaj Allianz Future GainBajaj Allianz

Minimum – 1 year

 

Maximum – 60 years

Minimum – 18 years

 

Maximum – 70 years

Unlimited10 – 20 years

Minimum – Rs. 25,000

 

Maximum – Rs. 12,00,000

Max Life Fast Track Super PlanMax Insurance

Minimum – 91 days

 

Maximum – 50 and 60 years

Minimum – 18 years

 

Maximum – 70 years

NA10 years and 20 years

Minimum – 5 Pay: Rs. 50,000

 

Single pay: 1,00,000

HDFC Life Click 2 WealthHDFC Life Insurance

Minimum – 30 days

 

Maximum – 60 years

Minimum – 18 years

 

Maximum – 75 years

(For Golden Years Benefit Option – 99 years)

Unlimited10 years to 40 years

Minimum – Rs. 12000

 

Maximum – subject to Board Approved Underwriting Policy (BAUP)

Kotak Single Invest Plus PlanKotak Life Insurance

For Primary Life

Minimum –18 years

 

Maximum – 55 years for 10 years term

52 years for 15 years term

 

For Secondary Life:

Minimum – 3 years

 

Maximum – 55 years for 10 yrs term

52 years for 15 years term

For Primary Life

Minimum: 28 years

 

Maximum: 65 years for 10 years Term

67 years for 15 years Term

 

For Secondary Life:

Minimum – 18 years

 

Maximum – 65 years for 10 years Term

67 years for 15 years Term

1210 years and 15 years

Minimum – Rs. 3,00,000

 

Maximum – No upper limit

ICICI Pru SignatureICICI Prudential Life Insurance

Minimum – No minimum age

 

Maximum – 60 years

Minimum – 18 years

 

Maximum – 75 years

(For Whole Life Cover Option 99 years)

Unlimited

Minimum – up to 10 years

 

Maximum – up to 30 years

Minimum – Rs. 30,000

 

Maximum – No upper limit

LIC Endowment PlusLife Insurance Corporation of India

Minimum – 90 days

 

Maximum – 50 years

Minimum – 18 years

 

Maximum – 60 years

NA10 years to 20 years

Minimum – Rs. 20,000

 

Maximum – No upper limit

SBI Life Wealth AssureSBI Life Insurance

Minimum – 8 years

 

Maximum – 60 years

70 years210 years to 30 years

Minimum – Rs. 50,000

 

Maximum – No upper limit

Bajaj Allianz Future Gain

It is a unit-linked endowment insurance plan that offers maximum premium allocation and life cover benefits as well. If you want to avail of maximum benefits at a minimum cost, then this plan is ideal for you as this plan allows you to use the maximum of your premium amount towards investment and thus assures increased returns.

Key highlights of the plan:

  • To enhance your benefit and protection, this plan comes with 5 additional rider options to choose from.

  • The insured person can avail of the death and maturity benefits in installments that are subject to a maximum limit of 5 years.

  • This policy offers the policyholders two unique portfolio strategies and they are as follows.

  1. Investor Selectable Portfolio where you have the option to choose among 7 funds at your convenience.

  2. Wheel of Life Portfolio that offers the insured person a “Years to Maturity” option on the basis of his/her portfolio management.

  • One can avail of the option to make a partial withdrawal any time after the 5th policy year that is subject to the policy’s terms and conditions.

Max Life Fast Track Super Plan

This plan is designed to reap the maximum benefits from your investments as it comes with a bundle of fund options (6) to invest as per your choice. You are also offered three premium payment term options, namely – Single Pay, 5 Pay, and Regular Pay.

Key highlights of the plan:

  • The insured person can avail of the maturity benefit either in a lump sum or in monthly installments that will be paid over 5 years period after the maturity.

  • In case of the unfortunate demise of the insured person, the beneficiary will be paid the life cover or the fund value whichever is higher and it is subject to a minimum of 105% of all the premiums paid to the plan.

  • This plan offers additional benefits as 0.30% of the fund value is added to the insured person’s fund by the creation of additional units that starts from the 11th policy year.

  • This plan is flexible enough to allow you to make two free partial withdrawals every year after the lock-in period of 5 years to meet your financial emergency.

HDFC Life Click 2 Wealth

This plan offers you three options to choose from according to your convenience and they are – Invest Plus Option, Premium Waiver Option, and Golden Years Benefit Option. To extend the benefits this plan also provides you three rider benefits – HDFC Income Benefit on Accidental Disability Rider, HDFC Protect Plus Rider, and HDFC Life Critical Illness Plus Rider. You can customize the plan as per your requirements.

Key highlights of the plan:

  • This plan is flexible enough as you can choose from 10 funds to maximize your investments.

  • Usually, ULIP Plans come with multiple charges but HDFC Life Click 2 Wealth only demands Fund Management charges and Mortality Charges. Additionally, if you opt for Premier Waiver Option, the mortality charges will be returned to you upon the maturity of the plan.

  • In case of the unfortunate demise of the proposer, this plan will waive off all the future premiums and your fund will still remain invested.

  • One can avail of the special addition of 1% of the premium allocated to your fund for the first 5 years that is subject to the policy’s terms and conditions.

Kotak Single Invest Plus Plan

It is a single premium policy, which means that you have to pay the premium just once and you can reap the maximum benefits from your investment, and also you will remain protected. This plan comes with joint-life protection cover, loyalty benefits and also provides you with the option to choose from a wide range of funds to invest your money according to your requirements.

Key highlights of the plan:

  • Under this policy, you can avail of the tax reduction facility under Section 80C and 10 (10D) according to the Income Tax Act, 1961.

  • This plan does not offer any liquidity during the first five years of the policy period. Additionally, the insured person cannot withdraw or surrender the money/policy either entirely or partially till the end of the 5th policy year.

  • The sum assured will be 1.25 times of the Single Premium on the death of the 1st insured person and the amount will be 10 times of the Single Premium in case of the unfortunate demise of the 2nd person.

  • This plan offers loyalty additions at the end of the 10th year for a policy of 10 year term and at the end of 10th and 15th year for a policy of 15 year term.

ICICI Pru Signature

With this plan, you can not only get better returns from your investments, but also you can cover your beloved ones with life cover. Your entire premium amount will be allocated among your chosen and desired funds without any deductions whereas the mortality and policy administration charges will be returned at the time of maturity if you have purchased the plan online.

Key highlights of the plan:

  • The insured person can avail of Loyalty Reward with Wealth Boosters at regular intervals if he/she stays invested in the plan without any break.

  • If you opt for a Systematic Withdrawal Plan, you can enjoy a regular flow of money from your fund value.

  • This plan comes under the tax exemption benefit under Section 10 (10D) and 80C of the Income Tax Act.

  • This plan comes with flexibility as you are given the choice of 4 portfolio strategies and a wide array of funds to choose from.

LIC Endowment Plus

It is a non-participating, endowment assurance ULIP plan that comes with both the investment and insurance coverage during the policy period of the plan. Under this plan, 4 types of investment funds are available. The unit fund demands various charges and the value of the unit may increase or decrease on the basis of Net Asset Value (NAV). This flexible plan is specially designed to provide safe and secure life and long-term savings as well.

Key highlights of the plan

  • Death and maturity benefits are available under this policy.

  • One can pay the premiums regularly at yearly, half-yearly, quarterly, or monthly (through ECS mode only) intervals during the term of the policy.

  • To enhance the cover, one can go for the rider options available under the policy.

  • The company offers a grace period of 30 days for the payment of yearly or half-yearly or quarterly premiums and 15 days for the monthly (ECS) premiums.

SBI Life Wealth Assure

Under this plan, you have to pay the one-time premium and you can avail of the market linked returns and insurance coverage as well ensuring the financial protection of your family. You can enjoy the liquidity through the partial withdrawals from the 6th policy year to meet any financial emergency.

Key highlights of the plan:

  • This plan offers you 7 fund options to choose from and you can also enhance the benefits of your plan by opting for the Accidental Death Benefit Option.

  • You can avail of the tax exemption benefit under this plan as per the tax laws of India, if you plan wisely that is subject to the terms and conditions of the company.

  • Once the policy term is completed, you will be paid the maturity benefit that is the fund value.

  • In case of the unfortunate demise of the insured person, the beneficiary is entitled to receive the death benefit that is the sum assured or the fund value, whichever is higher.

What is The Functioning of ULIP Plans?

In unit linked plans, one part of the premium paid by the insured person is used to provide him/her life cover and the rest of the part of the amount is invested in different types of funds chosen by the policyholder. In case of the demise of the proposer, the beneficiary will receive the death benefit that is either the investment value or the fund value, whichever is higher.

To understand the function of a ULIP plan better, here is an example.

Mr. Sharma is a 36-year-old businessman. He wants to secure his life with a ULIP plan. So, he has chosen SBI Life Wealth Assure. He has opted for the following options:

Policy term: 30 years

Premium amount: Rs. 50,000

Premium payment term: Single

Sum assured: Rs. 62,500

Sum insurance multiplier: 1.1

Fund investment: Equity fund (100%)

Rider option is taken: No

For the above-mentioned chosen options, under this plan, Mr. Sharma can avail of the following maturity benefits-

At assumed rate of returns: Rs. 90,378 (at 4% rate) or Rs. 2,83,263 (at 8% rate).

What Should You Consider While Choosing a ULIP Plan?

You might get confused about which ULIP plan would be most suitable for you. But if you keep the following factors and parameters while opting for a ULIP plan, your job will be smoother.

  • Analyze and understand your personal investment goal ULIP plans are designed for long-term investment. So, before investing your time and money, you need to understand your future investment goals; what you expect from your investments.

  • Know your insurance objectives Investment goals may vary from one person to another. You need to understand what your main purpose is and how much protection and returns you expect from your investments as with the growing age the inflation rate and responsibilities change. So, selecting and fixing up your insurance objectives is very important.

  • Do market research The insurance market is flooded with a bundle of ULIP plans that creates confusion for the policy-seekers in which ULIP plan they should invest. Without anyone’s influence, it is best to market research yourself. Different ULIP plans come with varied benefits and features. After assessing your investment goals, you need to compare different ULIP plans. You can do it both online and offline and then go for the most suitable one for you.

  • Use ULIP calculator It is very important to know how much return you can get in the future because your investment objectives depend. You can calculate the approximate returns using the insurance companies’ portals or by using any ULIP calculator tool.

  • Flexibility Usually, the ULIP plans are flexible and transparent. But you need to be sure of policy period flexibility and investment flexibility. Every ULIP plan comes with a lock-in period. Compare the policy tenure and the lock-in period and then select any. Again, insurance companies offer a variety of fund options to invest in. Understand and select the fund(s) carefully as on the basis of it, you are going to reap the returns in the long term. And remember, ULIP plans are exposed to capital market risks. So, select your fund(s) wisely.

  • Assess the market risks As previously said, ULIP plans are exposed to market risks and the insured person has to borne that, it is very important to understand that how many risks you can take on the basis of different factors such as your age, your present financial condition, return expectations, future liabilities and responsibilities, inflation rate and so on.

  • Understand the charges Know about different charges levied such as mortality charges, surrender charges, premium allocation fees, fund management charges, and admin and service charges.

  • Understand ULIP Plans In which plan you are investing, knowing nook and corner about that plan is a pivotal part. So, know the general features and benefits of ULIP plans and also know the exclusions. Understand how ULIP plans function. Do some research about it on your own.

  • Check out the performance of the plan If you have selected a ULIP plan, before finalizing it, check out the previous performance of the selected plan. The last 5 years’ performance record will give you a clear idea about the plan’s reliability.

  • Solvency and claim settlement ratio These two are important parameters as it denotes the company’s performance and its trustworthiness. You can easily get the data from the IRDA Annual Report online.

  • Check out the investment strategies offered Many Insurance companies come with different investment strategies that help you to build up various covers such as retirement remuneration. So, know your future needs well and then evaluate the strategies and then only go for the most desired ULIP plan

Difference between ULIP and Traditional Insurance Plans

The ULIP plans are way different from traditional insurance plans. Find out the difference below.

ULIP PlanParametersTraditional plan
ULIP plan is a market-linked plan that comes with both the benefits of Investment and insurance plan.DenotationA traditional plan usually comes with guaranteed maturity benefits
ULIP plans are exposed to capital market risks and risks are higher.Risk factorThe traditional insurance plans are less risky as it invests in low-risk return options.
ULIP plans are much more flexible as the insured person can invest in a fund(s) according to his/her choice and a wide array of fund options are offered.FlexibilityNo fund option is provided in the case of traditional plans. On the basis of the fund details, money is invested.
ULIP plans offer partial withdrawal of the money during the policy period to meet financial emergencies.Withdrawal optionGenerally, traditional insurance plans do not offer any partial withdrawal benefit. In fact, if you opt for it, you may face losses.
Under a ULIP plan, the insured person can do free switches among the fund options up to a certain limit.Switching optionIn the case of traditional plans, they do not offer any fund switching benefit as it is determined by the insurance company.
ULIP plans are transparent. The insured person can monitor his/her investments and portfolio by using any tool such as ULIP NAV.TransparencyThe insured person cannot keep an eye on his/her investments or portfolio.
The money can be invested in different types of funds such as equity funds, debt funds, hybrid funds, and much more.Fund optionsThe money can only be invested in a debt fund.
At the time of maturity, the policyholder can avail of the benefits as returns on the basis of the prevailing unit prices.Maturity benefitThe insured person is offered the maturity benefit and bonus only at the time of the maturity of the policy.
Under ULIP plans, loyalty benefits are offered on long-term investment.Loyalty benefitUsually, traditional plans do not come with loyalty benefits but some insurance companies offer it for continuing the policy for the full tenure.
After the lock-in period (usually 5 years), the insured can enjoy the liquidity benefit.LiquidityThe traditional insurance plans are locked till maturity.

Buy ULIP Plans Online

You can easily buy ULIP plans online by following the below-mentioned steps.

  • Go to the official website of the desired insurance company.

  • Select the ULIP plan of your choice.

  • Fill the form according to your conveniences such as policy period, policy premium payment tenure, etc.

  • Click on the ‘Proceed’/’Buy’ option and make payment.

  • While making the payment, you need to select the payment mode such as monthly, quarterly, half-yearly, and annually.

  • Upon successful payment, the policy document will be sent to your registered email ID.

You can also buy the ULIP plans offline by visiting the insurance company’s nearest branch and their experts will guide you through the process. you can even call on the contact number of the company to get assistance with the buying process. you can also take the help of a registered and licensed agent of the company to avail of a seamless buying process.

Claim Settlement Process of ULIP Plans

To avail of the seamless claim settlement process for the ULIP plans, follow the following steps.

  • At first, inform the insurer about the financial emergency either online or offline.

  • Submit the duly filled and signed claim form along with the other required documents such as to cause of the emergency, details of the beneficiary, particular date, and so on.

  • The insurer will appoint a surveyor to assess and evaluate the documents and the situation.

  • If the claim is transparent and approved, the insured person will receive the claim amount within the stipulated period in his/her registered bank account.

  • If the claim gets rejected, you will be intimated about the same.

Required documents for claim settlement:

  • Policy document/policy number.

  • Valid photo ID proof.

  • Valid address proof.

  • Your income proof.

  • Age proof

  • Any other document as demanded by the insurer.

Frequently Asked Questions

1. Can I avail of a loan against the ULIP plan?

According to the new IRDA rules and guidelines, one cannot get a loan against a ULIP plan.

2. Can I stop a ULIP plan after 5 years?

Yes, you can. In that case, the policy will be terminated on an immediate basis. The accumulated returns will be received till the termination date. If the policy is availed for more than 5 years, no surrender charges are charged.

3. Is the interest on ULIP plans taxable?

No.

4. What is ULIP NAV?

ULIP NAV refers to the Net Assess Value of each unit of the ULIP fund on a particular day. You can monitor ULIP NAV on the insurance company’s website/portal.

5. I am an NRI. Can I buy a ULIP plan?

Yes, the NRIs can avail of a ULIP plan.

6. Can I activate a lapsed ULIP plan?

Yes, you can. Usually, the insurance companies offer a stipulated period of time (at least 2 years) to pay all the due premiums. The discontinuation charges will be waived off and the plan will be active again.

7. What are the different charges under a ULIP plan?

The various charges are – premium allocation charges, policy administration charges, surrender charges, mortality charges, fund management charges, fund switching charges, discontinuance charges, and partial withdrawal charges.

8. What is the difference between ULIP and SIP?

Unit Linked Insurance Plan comes with double benefits such as insurance and investment benefits. But SIP (Systematic Investment Plan) offers the insured person to invest a certain amount of money in a desired fund of the policyholder at a predetermined interval of time. It is a planned approach to gather a corpus after a certain period of time whereas under the ULIP plan the insured can reap the returns in the long run and can also enjoy the benefits of life cover.

Life Insurers