What is ULIP (Unit Linked Insurance Plan) Plan?

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Full form of ULIP: Unit linked Insurance Plan. ULIP's combine insurance and investment. The money you invest goes towards your protection and the rest is used to invest in the market. Premiums are payable monthly or annually by policyholders.

 

Introduction

The capital market risks are present in Unit Linked Insurance Plans. The policy holder is responsible for any investment risk in the investment portfolio. You should therefore consider your risk appetite and your needs before making your investment decision.
You should also consider your future financial needs. HDFC Standard Life has a range of unit-linked insurance products that can be tailored to your needs, whether it's for retirement planning, your child's education, or investment.

 

Which investor class are they most suited for?

Investors who want to keep an eye on their investments

Unit-linked insurance plans enable policyholders to closely manage their portfolios. You can also switch between funds that have different risk-return profiles with unit linked insurance plans.

Individuals who have a medium- to long-term investment horizon

ULIPs (Unit Insurance Linked Plans), are for those who can stay invested for a long time.

People with different risk profiles

The equity component of the seven funds is variable between zero and a maximum 100 percent. There are funds for all investors, from the risk-averse to the high-risk investor.

All life stages welcome investors

This plan category has a wide range of plans that can be chosen depending on your life stage and financial needs.

 

 

Features of ULIP

One Premium

The policy holder must pay the full premium as a lump sum at start of policy term.

Regular Premium Payment (annually, semi-annually, or monthly)

The premium amount must be paid by the policy holder on a regular basis, i.e. The premium payment term chosen will determine whether the premium payments are to be made monthly, semi-annually, or annually.

Number of premium-paying years

It depends on which term you have selected for your policy. The policy term and number of premium-paying years (in the case of regular premiums), are almost always the same. Some policies allow the insured to choose the number of premium-paying years.

Ulip Fees

These charges will be deducted from your policy to cover the costs of administration and benefits provided by HDFC Standard Life Insurance.

Administration fees

Administration fees are charged each month for your policy. You can cancel units by taking out the appropriate amount from the funds you choose to pay administration charges.

Management fees

These fees are used to cover expenses associated with managing the fund. These charges are a percentage of fund value and are deducted from the fund's net asset value.

Transfer charges

Switching between funds is possible to meet your changing goals and needs. A fixed number of these switches is available for free during a policy year. Each switch thereafter would be subject to a charge. These charges can be deducted by cancelling units proportionately out of each of your funds.

Surrender fees

These charges can be imposed for the premature cashing of units. These charges are a percentage of fund value and vary depending on policy year.

Mortality charges

These charges can be based on the insured's age and amount of coverage.

Premium Allocation Fee

This fee is calculated as a percentage of the premium received and is typically charged at a higher rate during the first year of a policy. The charge will vary depending on whether the policy is a single-premium plan or a regular premium policy. It also depends on the size of your premium, frequency of premium payments, and mode of payment.

Partial Withdrawal Fees

After the policy term has expired for three years, lump sum withdrawals from the fund are permitted subject to certain conditions. These withdrawals are subject to charges as per the policy brochures.

Switching between Funds

This allows you to choose between the funds that are available under a unit-linked Insurance plan.
In times of market volatility and fluctuating interest rates, you may want to switch between debt and equity funds. You may need to change your investments if your financial situation, liabilities, or risk profile changes.

How to Withdraw

After a specified time, partial withdrawals may be possible from your funds. However, partial withdrawal charges may apply. The minimum withdrawal amount must be at least the prescribed amount, and the fund cannot fall below the minimum value after the withdrawal. A full withdrawal can be made of your policy prior to its maturity date. In this instance, surrender fees will apply.

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