an overview of ulips
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8/8/2019 An Overview of ULIPS
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An overview of Unit linked insurance plans
(ULIPS)
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Agenda
Introduction to ULIPS
Benefits of a ULIP
Charges in a ULIP
Break-up of the charges in aULIP
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What is a ULIP??? ULIPs are a category of goal-based
financial solutions that combine thesafety of insurance protection withwealth creation opportunities.
In ULIPs, a part of the investmentgoes towards providing you life cover.The residual portion of the ULIP isinvested in a fund which in turninvests in stocks or bonds.
the value of investments alters withthe performance of the underlyingfund opted by you.
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Objectives
To gain a deeper understanding of ULIPS and learn how they work.
To understand the benefits that a
ULIPS have to offer.
To understand the terminologyused in ULIP plans.
To learn about the various chargesin a ULIP in detail.
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Benefits of a ULIP
Provides flexibility in investments
ULIPs offer a complete selection of high, medium and low risk investment optionsunder the same policy.
You can choose an appropriate policyaccording to your risk taking appetite, coupled with the opportunity to switchbetween fund options without anyadditional expense.
ULIPs provide the flexibility to choose thesum assured and investment ratio in theannual targeted premium. It also offers theflexibility of one time increase ininvestment portfolio, through top-ups
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Transparency
The charge structure, value of investment and expected IRRbased on 6% and 10% rate of returns, for the complete tenureof the policy are shared with you
before you buy a product.
Similarly, the annual accountstatement, quarterly investmentportfolio and daily NAV reporting, ensures that you are aware of the
status of your investmentportfolio at all times
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Liquidity
To cope with unforeseencircumstances, ULIPsoffer the benefit of partial withdrawal;
wherein after 3 yearsyou can withdraw fundsfrom your Unit Linkedaccount, retaining only
the stipulated minimumamount.
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Disciplined and regular savings
ULIPs help you inculcate a
regular saving habit. Also,
the average unit costs
tend to be lower than one
time investment.
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Multiple benefits bundled in one
product ULIP is an outstanding
solution for risk cover, long
term investments with thebenefit of various investment
opportunities, coupled with
tax benefits.
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Spread of risk
ULIPS are ideal even for
those investors who wish to
avail the benefit of market
linked growth without
actually participating in the
stock market, with the
added benefit of risk-cover.
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Charges in a ULIP
Premium Allocation Charge
Mortality Charges
Fund Management Fees
Policy/ Administration Charges
Surrender Charges
Fund Switching Charge
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Break-up of charges
Invested amount
Premium allocation charges
Fund management charges
Policy administration charges
Mortality charges
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Premium Allocation Charge
This is a percentage of the
premium appropriated
towards charges before
allocating the units under the
policy. This charge normally
includes initial and renewal
expenses apart fromcommission expenses.
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Mortality Charges
These are charges to
provide for the cost of
insurance coverage under
the plan. Mortality chargesdepend on number of
factors such as age, amount
of coverage, state of health
etc
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Fund Management Fees
These are fees levied for
management of the fund(s)
and are deducted beforearriving at the Net Asset Value
(NAV) .
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Policy/ Administration Charges
These are the fees for
administration of the
plan and levied bycancellation of units.
This could be flat
throughout the policy
term or vary at a pre-determined rate.
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Surrender Charges
A surrender charge may be
deducted for premature
partial or full encashmentof units wherever
applicable, as mentioned in
the policy conditions.
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Fund Switching Charge
Generally a limited number
of fund switches may be
allowed each year without
charge, with subsequent
switches, subject to a
charge.
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