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How does a Unit Linked Insurance Plan work?

A Unit Linked Insurance Plan seamlessly blends life insurance coverage with market-linked investments. Your role as a policyholder involves paying premiums as per policy terms. In return, you receive life coverage, ensuring financial protection for your nominees. Additionally, ULIPs provide opportunities to invest in market-linked funds like equity and debt funds. Gains from these investments are disbursed upon maturity, thereby offering a dual benefit.

What are Mortality Charges in ULIPs?

Mortality charges in ULIPs are fees levied by insurance providers to cover the risk associated with offering life coverage. As a policyholder, you pay these charges to ensure the insurer's ability to provide the promised life cover. Unlike traditional insurance plans, mortality charges in ULIPs are deducted from your funds on a monthly basis.

Factors that Affect ULIP Mortality Charges

Understanding ULIP mortality charges calculation involves considering several factors that influence the charges imposed by insurance providers:

  • Your Age: Younger individuals generally incur lower mortality charges as mortality rates correlate with age.

  • The Amount of Coverage: Higher coverage translates to increased risk for the insurer, resulting in higher mortality charges.

  • Your Overall Health: Better health lowers mortality risk, leading to more affordable mortality charges.



Insurance providers use these factors to create a table of standard annual mortality charges, aligning with average mortality rates based on age and health conditions.

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How are ULIP Mortality Charges Calculated?

The formula for ULIP mortality charges calculation is as follows:

Mortality Charge=(Mortality Rate for the Age Attained×Sum at Risk/1000×12)

Key points to note:

  • The sum at risk is equivalent to the sum assured or coverage offered by the ULIP.

  • Mortality charges are calculated per Rs. 1,000 of the sum at risk.

  • Actuaries determine mortality rates based on factors such as age.


As you age, mortality rates and, consequently, mortality charges tend to increase.

Return of Mortality Charges (RoMC) in ULIPs

To address concerns about mortality charges, ULIPs often include a valuable feature known as the Return of Mortality Charges (RoMC). If the insured survives until the plan's maturity, the mortality charges deducted throughout the tenure are returned to the policyholder. This amount is included in the fund value paid out at maturity, thereby ensuring a more favorable financial outcome.


Conditions for RoMC Benefits:

  • The policy must not have been surrendered.

  • All premiums should have been paid on time.

  • The insured person should have survived until the plan's maturity.

Conclusion: Maximizing Benefits in ULIPs

Despite the existence of mortality charges, ULIPs stand out for their market-linked returns. The RoMC feature provides an additional advantage, allowing policyholders to reclaim mortality charges upon plan maturity. Head to Bajaj Markets to explore ULIP options, considering your financial needs and preferences.

FAQs on Mortality Charges in ULIPs

Do all ULIPs levy mortality charges?

 Yes, mortality charges are a standard component of all Unit Linked Insurance Plans. Payment is based on the insurer's calculation.

What factors influence mortality charges in ULIPs?

Mortality charges depend on age, gender, lifestyle habits, coverage amount, and mortality rates set by the insurance provider.

Will I receive mortality charges back on maturity?

 If your ULIP includes the Return of Mortality Charges (RoMC) feature and you've opted for it, you will receive mortality charges back upon plan maturity.

Are ULIP mortality charges levied upfront?

No, mortality charges in ULIPs are deducted monthly from your funds and not paid upfront.

Do I have to pay mortality charges out of pocket?

No, mortality charges are deducted from your ULIP funds each month, alleviating the need for out-of-pocket payments.

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