Unit Linked Insurance Plan (ULIP)

ULIP is one of the most reliable wealth creation instruments available in the market. With this product, you can reap multiple benefits that it has in store. Let us tell you why to invest in ULIP plan.

• Helps You Build Your Wealth Over Time – With the liberty to invest in equity and debt funds along with a minimum lock-in period of five years, ULIP are the best investment instruments for accomplishing long-term goals.
• Dual Benefits – ULIP offers dual benefits – to make investments of your choice as well as avail an insurance coverage – all under a single plan.
• Flexibility – You get the flexibility to choose the type of funds you want to invest in. Moreover, you can also switch these funds based on the market movements.
• High Returns – Since you have the flexibility to switch funds based on the market movements, you can obtain higher returns on the invested amount.
• Tax Benefits – Under the Income Tax Act of 1961, ULIP is tax-free. Under section 80C, you can claim deductions equivalent to the premium amount paid for ULIPs as life insurance or under 80CCC as pension up to a permissible limit. This limit is currently set at Rs 1.5 Lakh. You can enjoy ULIP tax benefits through deduction on the premium amount. You can avail up to 10% of the sum assured with a ceiling of Rs. 1.5 Lakh. You can also claim all the charges collected by the insurer such as service charge as a deduction. Moreover, the amount you receive as partial withdrawal/at maturity of the ULIPs is tax-free under section 10(10D) of the Income Tax Act, 1961. The death benefit payout upon death of the policyholder is also exempt from tax.
• Protection to Self and Family – With the life insurance coverage, you will be able to protect yourself as well as your loved ones, even in your absence. 

ULIPs vs Mutual Funds vs FD

Already investing in Mutual Funds or saving money in Fixed Deposits? That’s ok. You should still consider investing in a Unit Linked Insurance Plan. The difference between ULIPs, Mutual Funds, and FD can be summarised with the following table –

Types of Unit Linked Insurance Plans

You can choose from the following types of ULIPs available on our platform -

Retirement Plan – Invest in a pension plan to prepare yourself for a secured life post-retirement. Under this plan, an individual pays the premium during the tenure of his/her employment. This premium is divided into two parts – one part goes towards your life insurance cover and the other part is invested in an instrument of your choice. This small amount that you periodically invest builds a corpus which you can use after retirement.

Child Plan – With a child plan, you take a step towards securing your child’s future. Whether it’s your child’s education, marriage or any other important event, this plan helps you to stay financially secure. A child plan also offers life insurance cover for your child. This way, you can protect your child against any unforeseen situations and ensure they realize all their dreams.   

Investment Plan – Your earnings today might not be adequate tomorrow. Moreover, high inflation rates and constantly rising prices of commodities can eat away your savings. Therefore, it is necessary to invest today to secure your future! An investment plan can help you achieve your goals of long-term wealth creation and security for your family. What’s more? Your investment in ULIPs, as well as returns on maturity, are tax-free! 

Which ULIP Suits You The Best?

We at Finserv Markets offer three types of ULIP plans –

1. Child Plan
2. Retirement Plan
3. Investment Plan

Depending on your financial needs, you can choose to invest in one of the options available. But before you make any decisions, let us first understand each plan based on the examples below.

1. Child Plan

If you are a mother wanting to save for your child’s future monetary needs –

2. Retirement Plan

If you are working towards saving for your retirement –

3. Investment Plan

If you are a young professional wanting to invest in the market to grow a steady corpus –

Dealing in the stock market comes at a price. When you make ULIP investments, it is essential to understand the risk involved. Hence, before you choose a ULIP plan, make sure that you have calculated the risk in advance.

Like we mentioned earlier, you can either invest in high-risk equity funds or low-risk debt funds. With ULIP, you also get an option to invest in funds that are a combination of the two. The risk involved for you as an investor can be calculated with the help of our ULIP risk calculator. 

Features of Unit Linked Insurance Plans

Before you decide to invest in ULIPs, make sure that you well-versed with its features.

ULIP Charges

Here’s a list of ULIP charges that you should know –

• Premium allocation charges
• Administration charges
• Surrender charges
• Mortality charges
• Fund management charges
• Fund switching charges
• Discontinuing charges
• Partial withdrawal charges

ULIP Lock-In Period

The lock-in period for ULIPs is five years. This means that for the first 5 years, the money that you invest in ULIPs gets locked. After this period is over, you are allowed to withdraw funds from your ULIP plan, however, this is not recommended. The longer you stay invested in a ULIP plan, better are the chances of earning good returns.

Type 1 and Type 2 ULIPs

Why Choose Bajaj Allianz Life’s ULIP Plans?

In the long run, each investment makes a significant difference to your portfolio, further taking you closer to your financial goals. Hence, for each financial purpose in your life, there is a ULIP plan available in the market. Bajaj Allianz Life’s ULIP Plans are a reliable mode of investment for accomplishing your dual needs – insurance as well as building your wealth alongside.

That’s not it!

With Bajaj Allianz Life’s ULIP plans available on Finserv MARKETS, you can benefit from facilities such as partial withdrawal of funds, alter premium payment frequency, rider options, and more. Some plans also offer features like the return of mortality charges, return enhancers, loyalty additions, fund boosters, and more.

Just browse the range of online plans and choose a policy that best suits your financial needs to get high ULIP returns.

ULIPs - Myths and Truths

Lack of adequate knowledge and misinformation has led to a lot of myths hovering around investments in ULIPs. Let’s break them!

• Myth #1: ULIPs carry high risk as they invest only in equity.

ULIPs give you an option to invest in market instruments that can either be debt only, equity only or a mixture of debt and equity. You can choose funds that best suit your need, risk appetite, and long-term objectives. With Bajaj Allianz ULIPs, you also get the facility to switch between funds at any given point in time depending on your personal preference and risk appetite.

• Myth #2: You cannot add to your existing funds.

You can! ULIPs allow you to invest your surplus funds. You can pay a top-up premium at any given point in time during the tenure of the ULIP and enjoy the same benefits and tax deductions.

• Myth #3: The insurance cover gets affected due to market conditions

Market volatility has no effect on your insurance cover. Your insurance policy remains intact irrespective of the rise or fall in the market. In case the insured dies during the tenure of the policy, he / she gets the full amount of the life cover as stated in the policy.

• Myth #4: ULIPs do not provide good returns

ULIPs are long term investment products, where returns are dependent on the performance of the funds that one has invested in. With a good selection of funds and efficient switching between funds at the right time, Bajaj Allianz ULIPs can give good returns over a long-term period along with an insurance cover.

• Myth #5: ULIPs have high charges

It is still unknown to people that charges of investing in ULIPs have reduced significantly. The charges that are typically levied on your premium amount are – premium allocation charges, policy admin charges, fund management charges and mortality charges. Insurance Regulation Development Authority of India (IRDAI) has capped these annual charges to a good extent. If the lock-in period of your ULIP plan is 10 years or less, these charges may be a little higher as compared to ULIP plans with a 10 year+ lock-in period. Therefore, it makes sense to invest in ULIPs for long durations. 

Have a look at our exclusive Bajaj Allianz Life’s ULIP plans available on Finserv MARKETS designed to help you achieve your financial goals.

Learn more about Unit Linked Insurance Plans. Read in detail about the terminology used in these plans, the investment options, the top myths about ULIPs, current trends and much more. Have a look at the top articles on ULIPs before you explore Bajaj Allianz Life's exclusive ULIP plans available on Finserv MARKETS.