A ULIP or unit-linked insurance plan is a type of all-around and multi-faceted policy that provides insurance coverage as well as an investment option in stocks or bonds. This product requires customers to make premium payments on a regular basis.
A portion of the premiums is utilised to mitigate insurance costs, while the rest is added with funds from other clients and invested in bonds or other such financial instruments. A ULIP can be used to provide life insurance, develop your wealth and even for things like paying for the education of children and grandkids, among various other things.
ULIPs are frequently opened by investors to deliver benefits to their successors. The beneficiaries of a life insurance ULIP would receive payments when the owner dies. But as amazing as ULIPs sound, like all other investments in life, they too carry a certain amount of risk to them.
So how can one mitigate this risk? The first thing to do is to calculate the risk associated with any particular ULIP. You can use a ULIP calculator for this purpose.
ULIP plans are nowadays regarded as one of the greatest financial vehicles of modern times since they combine the benefits of insurance and investment. Individuals looking for a safe investment choice with a high return on investment might consider ULIPs.
However, ULIPs can have their own set of risks associated with them. Experts warn that because ULIP investments are not widely diversified, the risk is likely to be higher than with programmes like the Equity Linked Saving Scheme.
The risk connected with the plan, on the other hand, may be determined by the fund type connected to the plan. If the premium payment for a ULIP program is invested in the stock market, the risk level will be increased. Furthermore, if the premium is placed in debt instruments, there is the possibility of lower risk with a lesser return. In the event of stock investments, policyholders must bear the risk of volatility owing to market turmoil.
Given the large variety of ULIP plans on the market, it might be difficult for most people to select the plan that meets all the requirements - a big factor in this decision depends on the risk associated with any particular ULIP scheme.
Therefore, the ULIP plan calculator comes into the equation at this point and can really assist in making the difficult decisions associated with picking the perfect ULIP scheme for yourself. Investors can make use of the ULIP return calculator that is available online to figure out how much they need to invest in a ULIP plan to meet their long- and short-term investment targets.
Now that we have talked about what ULIP schemes are and the importance of ULIP investment calculators, it is also important to talk about how to use the ULIP investment calculators. So, the steps for using this risk calculator are as follows-
To begin, investors must first register for a free ULIP calculator online. The investor will be needed to enter the amount they intend to invest in the ULIP plan after logging into the free ULIP calculator online. Investors can then commit themselves to investing a minimum of Rs. 1500 every month, depending on their own eligibility.
Following that, you must choose the regularity of premium payments. Individuals can pay the premium in a flat sum or in annual, quarterly, or monthly payments, depending on their suitability. Post that, the investor will select the policy's duration.
After selecting the policy duration, the insured must next specify the amount of their premium payment that they want to put into investment in the next phase. The policyholder will then have to choose the investment lock-in period. A minimum of a 5-year lock-in term is required for ULIP policies.
The next stage is for the investor to choose which funds he or she wishes to invest in. Investors have the option of investing in stock instruments, debt funds, or a combination of the two. One must also gauge how well the scheme has performed in the past to ensure that they earn a healthy return on their investment.
The risk calculator has a robust set of features. Let us talk about some of them here-
The risk calculator can help investors determine the risk associated with various ULIP schemes and hence, help them select a scheme that is within their risk appetite and that they consider safe.
The ULIP calculator's main feature is its transparency. Dissimilar to many other investment products, the ULIP calculator provides transparent and detailed fund details, allowing investors to compute the actual amount of their investment gains.
Using the ULIP calculator has many benefits too, let us look at some of them-
To begin with, the risk calculator is absolutely free of charge and can help you in a big way to decide upon a scheme that falls within your risk appetite.
Moreover, it is really hassle-free and easy to operate so even rookie investors can make use of it. Investors can make use of this calculator and make long-term investments that yield them good returns and are in line with all their investment goals without going overboard with their risk tolerance.
So, in conclusion, ULIPs are a really amazing way to make the most of your buck and serve a dual purpose. And even though they can really expand the ways in which you invest your money, they still hold a certain degree of risk to them. That’s why you should always make use of a ULIP calculator to understand the risks behind many of these schemes and make sure you invest your money in a long-term plan that is well within your risk appetite.
In a Unit Linked Insurance Policy, the money you pay as premium goes into a pool called the Unit Linked Fund. This fund is managed by the insurance company and is invested in a range of equity and debt instruments to offer you the dual benefit of a Life Cover and a potential to get maximum benefits.
A Unit Linked Fund can be divided into a number of individual parts called units.
Fund Value is the total value of your premiums that are invested in various funds of your choice. It can be calculated by using the formula - Fund Value = Total Number of units under a policy x Net Asset Value
You should verify:- 1.All the charges deductible under your policy, such as policy allocation charges, fund management charges and other such relevant charges, 2. Features and benefits of your policy, such as loyalty additions, premium payment options and more such relevant benefits, 3. Limitations and exclusions under your policy like waiting period, lock-in period, pre-existing illnesses and more such relevant information, 3. Lapsation of your policy and its disadvantages, 4. Other disclosures, 5. Illustrations showing the benefits payable to you.
Money invested in A Bajaj Allianz ULIP can be claimed as a deduction under section 80C (life insurance) or 80CCC (pension). A maximum of Rs 1,50,000 is allowed under section 80C/ 80CCC. Deduction is available on life insurance ULIPS under Section 80C, up to 10% of the sum assured or annual premium whichever is lower subject to a ceiling of Rs. 1,50,000. Deduction towards premium paid for ULIP retirement under section 80CCC is Rs. 1,50,000. Further the overall limit of section 80C/80CCC/80CCD(1) is Rs. 1,50,000. Of course you can invest a higher amount, but the deduction will be limited to Rs 1,50,000.
Under this act, "a policy of insurance effected by any married man on his own life and expressed on the face of it to be for the benefit of his wife, or of his wife and children, or any of them, shall ensure and be deemed to be a trust for the benefit of his wife, or of his wife and children, or any of them according to the interests so expressed, and shall not, so long as any object of the trust remains, be subject to the control of the husband, or to his creditors, or form part of his estate."
ULIPs always had the edge, but the new LTCG tax gives them more punch. Even before the Budget proposed to tax long-term gains from stocks and mutual funds, Ulips had an edge over equity mutual funds. If balanced schemes or equity mutual funds were held for less than one year, the short-term capital gains were taxed at 15%. But since Ulips are insurance products, the short-term gains were tax free under Sec 10(10D). That advantage has become even bigger after the new LTCG tax kicks in from 1 April. The gains from balanced and equity funds will be taxed at 10% but income from Ulips will be tax free . The tax-free advantage of Ulips extends beyond equity funds to the fixed income space. Ulips not only offer equity funds but also debt and liquid fund options to investors. Income from fixed deposits is taxed at the marginal rate while LTCG from debt funds are taxed at 20% after indexation. But gains from Ulips are tax free. Whether you make short-term or long-term gains from any fund.
The benefit you will receive at the end of policy term is called Maturity Benefit. The Maturity Benefit will be equal to the Fund Value at the time of maturity.
In case of your unfortunate death before the maturity date, provided your policy is in force and all premiums are duly paid, the death benefit shall be paid to your nominee as a lump-sum which will be higher of the sum assured opted by you or the fund value as on date of death.
There are basically 5 charges in ULIPs. These amounts would be deducted from your insurance premium and balance is invested which would generate returns for you. 1. Premium Allocation charges: This is deducted from the premium upfront. It is a percentage of the premium appropriated towards charges before allocating the units under the policy, 2. Policy Administration Charge: This charge is deducted towards the administrative expenses incurred by the company towards the maintenance of the policy, 3. Mortality charges: This is the cost charged by insurance company towards providing you the insurance cover, 4. Fund management charges: These are charges for management of fund. These are reduced from the NAV of the fund, and 5. Surrender Charges: These are the charges which you need to bear in case you want to surrender your ULIP policy before the tenure of the plan. Generally you can surrender ULIP only after 5 years.
No interest earned on Bajaj Allianz ULIPs is tax-free.
No. You need to wait for the 5-year lock-in period to end before surrendering an existing ULIP.
The additional investments–over and above the regular premium you’re allowed to make in ULIPs are called top-ups. Yes, of course, for the purpose of tax deduction under section 80C of the Income Tax Act, there’s no difference between regular premium and a top-up premium.
In Unit Linked Polices, instead of taking a lump sum amount at maturity, some plans provide policyholders with the option to receive the Maturity Benefits as a structured payout (periodic installments) over a period of 5 years after maturity. This is known as the Settlement Option.
Partial withdrawals are allowed only if: 1.The minimum amount of partial withdrawal is Rs. 5,000, 2. The Regular Premium Fund Value should not fall below four times of the Annualized Premium after a partial withdrawal, 3. The maximum amount of partial withdrawal at any one time is 10% of the total premiums paid, 4. The total amount withdrawn through-out the policy term cannot exceed 50% of the total premiums paid, 5. The time interval between any two partial withdrawals cannot be less than 3 monthsPartial withdrawal are allowed only after life assured attaining age of 18 year and 6. The time interval between any two partial withdrawals cannot be less than 3 months.
Your policy shall automatically and immediately terminate on the earlier occurrence of any of the following events - 1. On foreclosure of the policy, 2. On the date of receipt of intimation of death of the Life Assured, 3. On payment of Discontinuance Value or Surrender Benefit 4. The Maturity Date, unless the policyholder has opted for the Settlement Option, 5. The expiry of the Settlement period, if opted and 6. On cancellation of policy during Free look period. All risk covers under the policy will terminate immediately, and the policy itself will terminate on payment of the last installment, if policyholder has opted for Settlement Option.
On discontinuance of premiums during the first 5 policy years: At the end of the notice period of 30 days, the policy will be converted to a Discontinued Life Policy and the Fund Value minus discontinuance charge will be transferred to the Discontinued Life Policy Fund. The discontinuance value shall be payable at the end of the lock-in period of 5 policy years. On discontinuance of premiums after the first 5 policy years: A notice will be sent by the Company to the Policyholder within 15 days of the expiry of the grace period to exercise one of the options mentioned below within 30 days of receipt of such notice - 1. Option A: Revive the Policy or, in writing, agree to revive the policy within the revival period by paying all due premiums, 2. Option B: In writing intimate the Company to surrender the policy and receive the surrender benefit, or 3. - Option C: In writing, intimate the Company to continue the policy as a paid-up policy with a paid-up sum assured with all the other benefits excluding additional rider benefits, Loyalty Additions & Fund Boosters, subject to deduction of all applicable charges under the policy. Till the expiry of the revival period or receipt of intimation of surrender request as per or receipt of intimation to convert as paid-up policy, whichever is earlier the policy shall be treated as in-force with all risk cover, including additional rider benefits, if any, by deduction of all applicable charges under the policy. If the company does not receive any intimation then, on the Date of Discontinuance, the Policy will be terminated and the Surrender Benefit shall be paid immediately.
No. Life cover is not available during the period of the Settlement Option under ULIP policies.
Bajaj Allianz Life Goal Assure is an individual unit-linked endowment plan. Go through the website 'Our Products' page for more information on Goal Assure.
At the end of the policy term, on the maturity date, the total amount of mortality charges deducted in respect of life cover provided throughout the policy term, will be added back as ROMC, to the Fund Value.
The amount paid out to the policyholder in each installment will be the outstanding Fund Value as at that installment date divided by the number of outstanding installments, hiked-up by 0.5%. Therefore, each installment is equal to [Fund Value / No. of Outstanding Installment] * 1.005. The hike-up is called the Return Enhancer.
Under the investor selectable portfolio strategy, the policyholder will have the following eight fund choices:- 1. Equity Growth Fund II, 2. Accelerator Mid-Cap Fund II, 3. Pure Stock Fund, 4. Pure Stock Fund II, 5. Asset Allocation Fund II, 6. Bluechip Equity Fund, 7. Bond Fund and 8. Liquid Fund.
Future Gain Plan is an individual unit linked endowment plan. Visit the 'Our Products' Page on ULIPs for more information on this plan.
There are two portfolio strategies - 1. Investor selectable portfolio strategy and 2. Wheel of life portfolio strategy.
Under the investor selectable portfolio strategy, the policyholder will have the following eight fund choices:- 1. Equity Growth Fund II, 2. Accelerator Mid-Cap Fund II, 3. Pure Stock Fund, 4. Asset Allocation Fund II, 5. Bluechip Equity Fund, 6. Bond Fund and 7. Liquid Fund.
Yes. After the first policy year, the policyholder will have the choice to reduce his sum assured subject to the minimum allowed under the product. Such reduction shall be allowed at monthly policy anniversaries only.
Yes, policyholder has an option to change (increase or decrease) the premium paying term at any time subject to the minimum and maximum premium paying term allowed under the product and subject to the minimum premium under the plan.
The full amount of premium paid is not allocated to purchase units. Insurers allot units on the portion of the premium remaining after providing for various charges, fees and deductions. However the quantum of premium used to purchase units varies from product to product. The total monetary value of the units allocated is invariably less than the amount of premium paid because the charges are first deducted from the premium collected and the remaining amount is used for allocating units
The policyholder can seek refund of premiums if he disagrees with the terms and conditions of the policy, within 15 days of receipt of the policy document (Free Look period). The policyholder shall be refunded the fund value including charges levied through cancellation of units subject to deduction of expenses towards medical examination, stamp duty and proportionate risk premium for the period of cover
Yes, one can invest additional contribution over and above the regular premiums as per their choice subject to the feature being available in the product. This facility is known as “TOP UP” facility.
Yes. “SWITCH” option provides for shifting the investments in a policy from one fund to another provided the feature is available in the product. While a specified number of switches are generally effected free of cost, a fee is charged for switches made beyond the specified number depending on the insurer.
The Company shall allocate Loyalty Additions to the Regular Premium Fund Value as percentage of one Annualized Premium from the 6th year onwards, provided all due Regular Premiums have been paid up to date. The Loyalty Additions are: 1. 5-year policy: Loyalty Addition not applicable, 2. 10-year policy: 0.50% applicable, 3. 15-year policy: 1% applicable and 4. 20-year policy: 1.5% applicable.
On the maturity date, Fund Booster will be added to the Regular Premium Fund Value, provided all due Regular Premiums have been paid up to the date. The Fund Booster (as % of one Annualized Premium) are: 1. 5-year policy: Fund Booster not applicable, 2. 10-year policy: 20% applicable, 3. 15-year policy: 40% applicable and 4. 20-year policy: 60% applicable.