What are ULIPs and the charges applicable on them?

ULIPs: An introduction

Unit Linked Insurance Policies or ULIPs are insurance policies that offer the opportunity of wealth creation, while providing the security of a Life Cover. In ULIPs, a part of your money is dedicated towards your Life Cover and the rest is assigned to a fund* which invests in equity, debt, or a combination of both. The returns depend on the performance of the fund opted by you.

ULIPs offer you the flexibility to choose your premium payment term, Sum Assured## and choice of funds to invest in. In addition, the premium break-up and charges under your policy are clearly mentioned in the policy documents and product brochure for greater transparency.

*Here, a fund is a collection of the money you paid as premiums and is managed by the insurance company to provide you better returns
##The Sum Assured is a fixed minimum amount that your nominee receives in your absence

What are the different types of charges in ULIPs?

It is important that you understand the premium break-up under your Unit Linked Insurance Policy. Once you decide the amount of premium to be paid and the Life Cover you want, the insurance company deducts a portion of the ULIP premium. This portion is called the Premium Allocation Charge, and varies from product to product.

The rest of the premium amount is invested in a fund or a mixture of funds of your choice. On this amount, Mortality Charges* and ULIP Administration Charges are then deducted periodically by cancellation of units. Also, the value of ULIP Fund Management Charges# is reduced from NAV** on a daily basis.

As mentioned above, the fund selected by you invests in either equity, debt or a combination of the two. Hence, the Fund Value## is the overall performance of the fund you have invested in. At maturity, you will receive an amount equal to your fund value at the end of your policy term.

*The cost of providing a Life Cover under the policy is called Mortality Charge
**Net Asset Value (NAV) is the price at which the units of a fund (equity or debt) are purchased.
Fund Management Charge is the fee charged by the insurance company, for managing your fund and providing better returns.

##Fund Value is the money that is invested in equity and debt fund of your choice.

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Unlike traditional products, Unit Linked insurance products are subject to market risk, which affect the Net Asset Values. The customer shall be responsible for his/her decision. The names of the Company, Product names or fund options do not indicate their quality or future guidance on returns. Funds do not offer guaranteed or assured returns.