Over the years, Insurance companies have been providing various insurance plans to its clients that protect their long-term interests and aspirations. This further evolved into a insurance plan as well as in investment vehicle in the years to follow, which we know the ULIP plans of today. Get to know more from this FAQs on Unit Linked Insurance Plans (ULIP):-
Top 9 FAQ’s about Unit Linked Insurance Plans (ULIPs) in India
- What is ULIP?
- Answer: Unit Linked insurance Plan or ULIP meaning a life insurance plan that provides flexible investment solutions along with providing financial protection against events such as death, accidents or disability. According to the ULIP insurance definition the policyholder has the option of choosing the equity, debt or balanced funds as well as life insurance cover.
- What is a Unit Linked Fund or Unit Fund?
- Answer: The premium paid by the investor goes into the Unit Linked Fund or Unit Fund which the insurance company manages on behalf of the investor. The funds are invested into various instruments from there which provides life cover as well as an investment option.
- What is a Unit?
- Answer: An individual part of the ULIP plans is called a unit. The investor can choose the types of units to invest in under the ULIP linked insurance products, such as equity fund, cash funds, bond funds or debt funds. Total price of units in a fund is calculated in rupees and called the Net Asset Value (NAV).
- What is Fund Value?
- Answer: The total value of the premiums paid by the investor which are invested into the various funds of the investor’s choice. Fund value can be calculated using a simple formula: Fund Value = Net Asset Value x Total number of units under a policy As an example, if the investor has 500 units of a fund at the NAV of INR 100, the fund value will be 50,000.
- What is Maturity Benefit?
- Answer: Maturity Benefit is the amount that the investor shall receive upon completion of the policy term. This equals the Fund Value at the end of the policy.
- Are Investment Returns Guaranteed in a ULIP?
- Answer: The performance of the fund in the capital market under the ULIP involves investor risks and the returns may “not be guaranteed”. The performance of the unit linked fund may grant the investor with gains or losses. The past performance of the unit is also not indicative of the future performance. The investor however can choose low, mid or high risk investment options to manage their risks.
- After taking the ULIP, can I switch the investment fund?
- Answer: Yes, most of the reputable funds provide option of shifting your investments from equity to debt funds and vice versa. It depends on the strategy and options that the investor has opted for while taking the ULIP policy and applies for the money that has already been invested while for the upcoming premiums need to be redirected through a separate option.
- Do ULIP provide tax benefits?
- Answer: Yes, the ULIP premiums are eligible for Tax Deduction as ULIP tax benefits under Section 80C of Income Tax Act, 1961.
- Can I withdraw my money before maturity from a ULIP?
- Answer: Yes, some of the ULIPs allow for “Partial Withdrawal” which can be facilitated through cancellation of certain number of units. Most of the ULIPs have a set period only after which the investor can do the partial withdrawal if they do not want to opt for the ULIP surrender.
If the investors feel that they have not been given a fair return on their investments under a ULIP, or there has been a case of ULIP mis-selling with them, then they can contact one of our experts at InsuranceSamadhan.com; who can provide support in different grievance cases in ULIP related to surrender, mis-selling, withdrawal of money, and freelook cancellation of ULIPs.
At InsuranceSamadhan.com, we have helped resolve over 12,600 customer grievance cases in the past related to insurance, ULIPs and other financial products.
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