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Premium

Sum assured

Term

Maturity

Claim-Maturity benefits and Death

benefits Surrender value

Lapse

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A unitlinkedinsurancepolicyisonein

whichthecustomerisprovided withalifeinsurancecoverandthepremium

paidisinvestedineitherdebtorequityproductsoracombinationofthetwo.

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1.Lifeprotection

2. InvestmentandSavings

Marketlinkedfundbasedonriskprofile

Switchoption

Premiumredirection

Automatictransferplan(ATP)

3. Flexibility

4.Transparency

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5. Extraprotection withriders

Deathduetoaccident

Disability

Criticalillness

6.Liquidity

Duringthetermpartial withdrawals

AtMaturity

7.Taxplanning

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In Indiainvestmentsin ULIParecoveredunderSection 80Cof IT Act.

ThepremiumspaidforULIPsareeligiblefortaxrebatesundersection 80 whichallowsa maximumof Rs.1,00,000premiumspaidfortaxableincomebelow Rs 8,50,000.

Proceedsfrom ULIPsaretax-freeundersection10(10D)unlikethosefromamutualfund whichattractshorttermcapitalgainstax.

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In traditional insurance, all premiums gointo a common fund which is invested at

insurers discretion. No transparency in terms of charges and

invested amount and lower return.

Modern insurance is against all of this.

Premiums are invested in capital marketat the holders discretion and completetransparency in charges and investedamount and category.

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Type I plan - pays the higher of the sum

assured or fund value to the nominees

upon the death of life assured. Type II plan - both the sum assured and

fund value are paid.

TypeII

is better but expensive.

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Covers 2 requirements - insurance andinvestment.

Freedom to choose

where to invest funds.

We can choose to increase our premiumpayments (top up facility).

Switching option is available.

Tax benefits upto Rs 1,00,000(sec 80c). Riders can be attached to the main policy

to provide you added protection.

Cover continuance option available.

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More expensive than other kinds ofinsurance products.

Heavy allocation charges and otheradministrative charges will make theamount available for investmentsignificantly restricted.

Not an attractive investment in the short

term (longer break-even time ). Good knowledge of the financial markets

needed to maximize returns from ULIP byswitching between funds at appropriatetimes.

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Maximiser

Protector Balancer

Preserver

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First-yearcharges

Administrationcharges

Riskcharges Assetmanagementfees

Switchingcharges

Top-ups Surrendervalueofunits

Fundperformance

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Unit-Linked Or With Profits

ULIP vs. Regular Insurance Policy

ULIP vs. Fixed Deposit