Understand the charges applicable for managing your ULIP
Although ULIPs offered by different insurance companies have varying charge structures, these are some of the most commonly applied charges:
Policy administration charges:
These charges are towards administration of policies. They are deducted on a monthly basis.
Premium allocation charges:
These charges are deducted upfront from your premium. After these charges are deducted, your money gets invested in the funds of your choice.
Mortality expenses are charged towards providing you a Life Cover. These expenses vary with age and are deducted on a monthly basis.
Fund management charges:
The Fund Management charge is for managing these allocations to offer you potentially higher returns.
As an policy holder, it is important for you to remember that since the overall charge structure of the ULIP reduces to a large extent over a long term, it is beneficial for you to stay invested for the entire term.
Understand the charges applicable for customising your ULIP
Riders provide an additional protection cover over the base Life Cover. Rider charges are deducted from your funds on a monthly basis. We, at ICICI Prudential Life Insurance offer Unit Linked Accident Death Benefit Rider.
ULIPs not only allow you to invest your money in fund options with different debt-equity exposures, but also give you the option to move your money between different funds. Moving your money from one fund to another is called Switching. For example, you can switch money from a fund invested 100% in equity to a balanced portfolio, which is invested 60% per cent in equity and 40% percent in debt.
Generally, only a limited number of fund switches are recommended in a year as a ULIP is a long-term instrument. ULIPs from ICICI Prudential Life offer you four free Switches in a year. For additional Switches, a minimal charge of `100 is applied per Switch.
Top-up is one of the unique features of a ULIP. This allows you to invest your surplus money either once or multiple times in your policy. This amount is over and above your regular premium payments and can be made at any time while your policy is in force. Top-ups help you grow your wealth further by increasing the amount of your corpus. Insurance companies may deduct a certain percentage from the top-up amount as charges.
Premium discontinuance charge:
You may decide to stop paying your premium before the lock-in period of five years. Upon discontinuance of premium payments, your money will be locked in a Discontinuance Fund. A Premium Discontinuance charge may be deducted for this, as mentioned under the policy conditions. This is charged as a percentage of the fund value or as a percentage of the premium. While you can discontinue your policy before the policy term, it is advisable to stay invested for at least 10 years to enjoy the maximum benefits offered by your policy.
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.