Things to know more about ULIPs
- Q1. What is a Unit Linked Fund?
Unit Linked Fund is a pool of the premiums paid by the policyholders which is invested in a portfolio of assets to achieve the fund(s) objective. The price of each unit in a fund depends on how the investments in the fund would perform. The fund is managed by the insurance companies.
- Q2. What does a Unit stand for?
A Unit stands for a portion or a part of the underlying segregated unit linked Fund.
- Q3. What is Net Asset Value?
Net Asset Value (NAV) is the value per unit calculated in rupees
- Q4. What is a Fund Value and how is it calculated?
Fund Value is the product of the total number of units under the policy and the NAV. The fund value for the purpose of claims, surrenders or any other clause stated shall be calculated on the basis of NAV.
- Q5. What do I get at the end of my policy term?
The benefit received at the end of policy term is termed as maturity benefit. The policyholder is entitled to receive fund value as maturity benefit.
- Q6. What should I verify before signing the proposal?
You should verify:
- All the charges deductible under the policy
- Features and benefits
- Limitations and exclusions
- Lapsation and its consequences
- Other disclosures
- Illustration projecting benefits payable in two scenarios of 6% and 10% returns as prescribed by the life insurance council.
- Q7. What will my family receive if something happens to me?
Investment returns from ULIP may not be guaranteed." In unit linked products/policies, the investment risk in investment portfolio is borne by the policy holder". Depending upon the performance of the unit linked fund(s) chosen; the policy holder may achieve gains or losses on his/her investments. It should also be noted that the past returns of a fund are not necessarily indicative of the future performance of the fund.
- Q9. Can I change / switch my asset allocation?
Yes, you can change the investment pattern by moving from one fund to other fund (s) amongst the funds offered under a particular product. Such a change between funds is termed as a Switch. There will be a flat charge levied for any switch over and above the free switches.
- Q10. What is Premium Re Direction?
Premium Re-Direction is the facility that allows a policyholder to modify the allocation of amount of renewal premium into a different investment pattern from the option (investment pattern) exercised at the inception of the policy.
- Q11. Can I partially withdraw from my policy?
Yes, you can encash / withdraw a part of the fund anytime after completion of three years, subject to surrender charges as applicable to each individual plan.
- Q12. Can I foreclose my policy? Are there any charges applicable?
Yes, you can foreclose your policy by Surrendering the policy. Surrender means terminating the contract once and for all. On surrender, the surrender value is payable to you which is Fund Value less the surrender charge. Surrender Charge means a charge levied on the fund value at the time of surrender of the policy.
- Q13. What does redemption mean?
Redemption means encashing the units at the prevailing NAV offered by the company. This is applicable in case of exercising partial withdrawal, switch, maturity, surrender, settlement option or in the case of payment of death benefit.
- Q14. What is the Settlement Option?
Settlement Option also known as periodical payment, means an option available to the policyholder to receive the maturity benefit as a structured payout over a period of up to 5 years after maturity.
- Q15. What is the date of commencement?
Date of Commencement of Policy as shown in the policy certificate is the date on which the age of the life assured and the term of the policy are calculated and the same are shown on the policy certificate.
- Q16. What is a Regular Premium Contract?
Regular premium contract means a ULIP where the premium payment is in level and paid in regular intervals like yearly, half-yearly or monthly.
- Q17. What is my monthly due date?
Monthly due date means the date in any subsequent calendar month corresponding numerically with the date of the commencement of the policy. In the event that there is no date in any subsequent calendar month corresponding numerically with the commencement date, then the due date shall be the last date in that subsequent calendar month.
- Q18. What does "Cover Cessation Date" mean?
Cover Cessation Date (Date of Maturity) as shown in the policy certificate is the date on which the policy contract comes to an end and is the date on which the maturity benefit becomes payable.