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Is ULIP a Good Investment Option?

Are you looking for a good investment option? Do you want to take a life insurance? Why not combine the two and invest in a ULIP? ULIP or Unit Linked Insurance Plan is the best of both worlds. The premium paid towards the plan has two components. A part of it is used towards a life insurance and the rest is invested in equity funds or debt funds or both.

Equity funds invest mainly in stocks. They are a high risk and high returns fund. Debt funds, on the other hand, invest in corporate bonds, commercial papers, treasury bills, and government securities that offer a steady interest rate and capital appreciation. These are low risk and moderate return funds. You can also decide to choose a Bajaj Allianz ULIP Plan available on Bajaj Markets that invests in a combination of both. 

The advantage for the investor is that you do not need to continuously monitor the stocks and make investment decisions. The investment managers at the company will do it for you. All you have to do is to choose the type of fund you want to invest in and the rest will be taken care of by the investment firm. 

Benefits of ULIPs

Here are few reasons you should consider investing in ULIPs. 

  • Double Advantage

Getting an insurance is non-negotiable. It is one of the most basic things you need to ensure your family's financial well-being. And investing your money in something that offers good returns is a way for you to grow your wealth and meet other financial goals. Since ULIPs combine both of these, it is a great way to get everything you want.

  • Tax Benefit

You can get significant tax benefits by investing in ULIPS since the premiums, as well as the maturity amount, are both exempt from taxation under Section 80C. 

  • Flexibility

The markets are always fluctuating. You may have chosen one particular fund when you started the ULIP, but it may have become less profitable now. In that case, you can switch to another fund without any additional charge. 

  • Transparency

Before you buy a plan, all the necessary details about the plan such as the expected returns, the charge structure, value of investment, etc. are shared with the investor. This lets you make an informed decision about the plan. Once you start investing, you will be given details such as the daily NAV, quarterly investment portfolio, and annual account statement. This lets you decide if you want to switch the funds or continue with the same spread. 

  • Regular Savings

Since you are required to put a particular amount as premium on a fixed schedule, it helps in developing a disciplined savings habit and you get regular savings. The money is also locked in for five years at least. All of this will lead you to plan for the future and it will help you develop a good saving habit. 

  • Good Returns

One of the main advantages of this plan is that, compared to other similar options, ULIP returns are higher and better. Since you can switch between funds and choose to invest in funds that are performing better at the moment, you will get good returns. You can also spread your investment over different funds to maximise the returns while minimising the risks.   

Top Performing ULIP Plans

If you are looking for Bajaj ULIP plans to invest in, here are a few good options available on Bajaj Markets to consider:

  • Bajaj Allianz Long Life Goal

Looking for a plan that also offers some retirement benefits? Then this is the plan for you. The plan provides retired life income from the age of 55 or the 10th year of the policy, whichever is latest, till the age of 99. You also get loyalty benefit, the option of partial withdrawal after the 5th year, and periodical return of life cover charges. 

  • Bajaj Allianz Life Goal Assure  

This is another great investment plan that lets you choose between eight funds and four investment strategies. It also provides loyalty benefits and is an excellent way to meet a defined financial goal. 

  • Bajaj Allianz Future Gain

This plan lets you invest in seven different funds and the majority of them offer double digit returns after five years. You also get unlimited free switches during the tenure.

Types of Fees and Charges in ULIPs 

While ULIPs offer many benefits and are a great investment option, you should also be aware that there are certain charges associated with the plan. Here are the important charges to consider. 

This charge goes towards the initial cost of recovering the distributor fee and cost of underwriting. 

  • Fund Management Charge

This is the charge for managing the fund. It is usually charged as a percentage of the value of assets. This amount is deducted before the NAV for the plan is calculated. 

  • Mortality Charges

In case the insured person doesn't live till the assured age, the mortality charge compensates the insurance company.

These are the main charges that you need to be aware of. As per the IRDA rules, the maximum charges that can be levied on a policy with term 10 years or fewer cannot exceed 3%. For a policy with a term period of more than 10 years, this charge cannot exceed 2.25%. The charges have come down a lot over the recent years, making ULIPs more and more profitable. Many plans also offer to return the mortality charges if the person lives above a certain age. Another major charge was the fund switching charge. But now, most plan offer unlimited free fund switches. So, at the maximum, you will have to pay 3% towards fees and charges and this amount is very comparable to the general market rate. 

Returns: ELSS vs ULIPS, MFs vs ULIPs 

The three most popular investment options right now are ULIPs, MFs, and ELSS. MFs and ELSS offer only investment option whereas, ULIPs offer insurance along with investment. Apart from this, let us compare the returns offered by the three.  


ELSS or equity linked savings scheme invest purely in equities. The returns vary based on the market conditions. This is a high risk and high returns investment option. Compared to ELSS, ULIPs offer more balanced returns. If you are risk averse and still want to get good returns, then ULIPs are the best choice.

  • MFs vs ULIPs

Mutual funds are another popular option for investing. Now, the five year returns of both, MFs and ULIPs are comparable. The difference, however, arises when you compare the tax benefits. The premium you pay towards the ULIP is exempt from tax and so is the maturity amount. However, the premium for a diversified equity fund such as the MF is not exempt from taxation.     

ULIP Calculator 

Before deciding on how much you can invest each month or each year, wouldn't it be better to know how much returns you can expect and how long it will take? You can use a ULIP calculator to get an estimate of this. The ULIP calculator will ask you to enter how much returns you expect and the term after which you want to earn that amount. It will ask you how much you will invest in the different risk categories. Based on this information, the calculator will tell you how much you should invest annually. This is great way to plan your investments and know how long it will take to achieve your financial goal. 

  • Start Investing Today

ULIPs are one of the most attractive investment options in the market presently and rightly so. They offer good returns, are transparent, offer flexibility, and combine insurance and investment into one product. Start investing in Bajaj Allianz ULIP Plans available on Bajaj Markets today and watch your wealth grow.

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