Unit Linked Insurance Plans

Unit linked insurance plan (ULIP) is a kind of life insurance plan where the investments are associated with the capital markets, ie, stock market. Any risks associated with the market directly affect your investments and these risks are borne by you, the investor, not the insurance company. The investment is denoted as units and is represented by the value called as Net Asset Value (NAV). The daily unit price is based on the market value of the underlying assets. Our site and also the insurance company’s website publishes the daily value of the NAV. You need to monitor your Investment’s NAV and you need to decide about switching your fund among the various fund options that are provided by your insurance company.

How much of your money gets invested? From the premium amount you pay, the company deducts the mortality charge and all the charges and service taxes as given in the illustration document of the policy. The net amount from that is invested in a particular fund that is chosen by you (the policy holder). You get as many units that your net amount can purchase on that day based on the NAV of that fund. For example, if, after deducting all the charges, you have Rs 8470 remaining to be invested in a fund called ‘A’ and if Fund A’s NAV is Rs 11.00 per unit on that day, then you would get 8470 divided 11 which is 770 units.

Now the returns in a ULIP depends upon the performance of your fund in the capital market. In the above example, if Fund A goes up to Rs 18, then your value of the investment also goes up (18 * 770 = 13860). If the value of your fund goes down to Rs 7 per unit, then you lose money (7 * 770 = 5390).

At the time of purchasing your policy, the insurance company gives you various options of investments that has different risk factors. At a minimum they would have at least one debt based fund (which is mostly invested in government securities carrying minimum risk and minimum return), one equity based fund (which is most invested in the stock market with maximum risk and maximum returns), and on balanced fund (which is a mix of debt and equity that is moderate risk and moderate returns).

It is important to remember that in a ULIP, the investment risk is almost always borne by you, the investor.

In our site, you can compare similar ULIP products offered by various life insurance companies and understand quickly on how they compare in terms of charges and the performance of the funds. You can also compare the NAV of funds across companies. For example, you can compare NAV of debt fund of one company with debt fund of another company over a period of time, thus see whose fund is performing better. By seeing and comparing the charges and features, you can pick and choose the company that suits you best. You can then purchase the policy online. We accept Visa, Mastercard, Maestro, and also Online bank transfer. You can also write your premium on a cheque and make the cheque in the name of the insurance company itself and send to us.