4 Replies to “What is Ulip based insurance plan?”

  1. a ulip based insurance plan is a combination of risk cover and investment. the premium amount is invested in the stock market funds, which provides regular returns. the poicy holder can invest, according to his/her risk appetite. but the past performance of the funds does not guarantee its future performance.

    there are many ulip based insurance plans available in the market.

    if you want to know about these products you can check out this website. : http://www.zibika.com


  2. I don’t know. But is part of the plan life insurance? Is it a Universal Life? Just remember, if it is you are also paying for life insurance. If that is the case, it is not a good investment.


  3. A very bad investment.

    Life insurance is meant to provide replacement income in case of your untimely death. Not invest it self and risk collapsing upon itself.

    You pay higher fees (although VUL plans are even higher) and get an average of 5% on your money. Inflation is 4.5% plus your tax bracket = loss of money.

    You are better offer getting a term insurance product (since the ULIP already does this for you) and investing else where.


  4. Insurance companies are no longer focused on insuring your life, health & assets.
    They are more eager to manage your investments. Almost 60% of their new insurance sales are ULIPs. Their profitability depends largely on attracting investments in the garb of life cover.
    The most common misconception of retail investors is the belief that insurance is a part of one’s portfolio.

    Objective of ULIPs: Triple benefit: Life Cover, Tax Benefit and Capital Appreciation.
    Objective of MFs: Good returns, Various investment choices, Tax benefit in ELSS.

    Tenure of ULIPs: Minimum tenure of 5 yrs. Max. term depends on age. 3 yrs. lock-in
    Tenure of ULIPs: Open ended- no tenure. Close ended-fixed tenure. ELSS- 3 yrs. lock-in

    Investment amounts in ULIPs: Determined by the investor & can be modified as well, but high.
    Investment amounts in MFs: Minimum amount is determined by the fund house. As low as Rs.500

    Expenses for ULIPs: Agents get very high commission so initial charges are high. Some of them are: Premium Allocation Charge, Risk Cover Charge / Mortality Charge, Policy Administration Charge, Fund Management Charge, Rider Charge. Other charges are:
    Switching Charge, Service Tax Charge, Miscellaneous Charge / Alteration Charge.
    Expenses for MFs: Upper limits of expenses chargeable have been set by the regulator. Max. 2.5% p.a. Quarterly disclosures are mandatory. Entry load of 2.25% for equity funds.

    Transparency of ULIPs: Ambiguous on cost structuring, sum assured, terminal benefits, benefit illustrations, term commitment, policy terms etc.
    Transparency of MFs: MFs have a standardized and convenient investment / redemption format and costs. They are very transparent and easy to understand.

    Portfolio disclosure of ULIPs: Not mandatory. In spite of IRDA guidelines portfolios are not disclosed.
    Portfolio disclosure of MFs: MFs disclose there portfolios on their websites and send monthly fact sheets to investors.

    Fund investment risk in ULIPs: All money goes to the fund of the insurance company.
    Fund investment risk in MFs: MFs diversify your money.

    Direct investment in ULIPs: Not possible. Only through agent.
    Direct investment in MFs: Now possible. You can avoid 2.25% entry load.

    Redemption of ULIPs: On maturity, surrender of policy after 3 yrs. or on death. Surrender after 3 years is very expensive. Different surrender values.
    Redemption of MFs: Highly liquid. MFs have tremendous flexibility. Open ended funds can be redeemed any time. Small exit load. Returns = NAV x Units

    Returns on ULIPs: Investment amount reduces due to high expenses. Lower returns.
    Returns on MFs: Higher returns than ULIP if invested in equity fund.

    Options for returns on ULIPs: Only in the form of capital appreciation or insurance cover.
    Options for returns on MFs: Two options: Dividend or Growth.

    Modifying asset allocation of ULIPs: Switch overs permitted for free or at a nominal cost.
    No option to switch between companies.
    Modifying asset allocation of MFs: Entry/exit loads have to be borne by the investor.

    Tax benefits on ULIPs: Sec. 80C benefits are available on all ULIPs.
    Tax benefits on MFs: Sec. 80C benefits are available only on ELSS funds.





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