What is the difference between ULIP and SIP?

SIP helps you invest a specific amount of money in mutual funds at regular intervals of time. ULIP insurance plan offers you twin benefits of insurance and investment in a single package.

Is ULIP a mutual fund?

No, it is not a mutual fund. However, it can be called as insurance cum investment plan.

No, it is not a taxable under section 10 (10D). Thus, the policyholder receives the entire sum assured.

What is premium redirection in ULIP?

ULIP insurance plan has multiple funds that differ based on their equity and debt allocation. A switch enables the allocation of the existing funds to a new fund. Generally, insurers do not charge for redirection.

What is fund switching in ULIP?

Switching is an option given to policyholders of ULIP insurance plan to move their investments from one fund to another, within one plan. You can transfer units fully or partially between equity, debt and equity to debt.

ULIP - Unit Linked Insurance Plans in India - Aditya Birla Sun Life Insurance

What is Wealth with Protection Plan?

Wealth with Protection or ULIP is a two-in-one plan that offers protection as well as investment opportunities in the capital market. The ULIP plan is insurance cum investment product that can be customized according to the insured persons requirements and provides the best of both - investment and protection.

How can Wealth with Protection help you?

Everyone has a vision for themselves and every vision needs a backing, primarily financial. Wealth with Protection Plan is the perfect go-to option for people who need a financial backing for a long-term goal and each goal needs a different plan.

ULIP for Retirement: This plan helps you to live a stress-free retirement life as you pay the premiums during the tenure of your employment. This amount is automatically collected and can be used as annuity.

ULIP for Wealth Creation: People invest in this plan to accumulate wealth over a period of time. This is a highly recommended plan for a millennial in his/her late twenties and early thirties, so that he/she can have the flexibility to fund any future financial goal. Know the premium to be paid against your plan with Wealth Calculator.

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Tax benefit:
As ULIP plans are life insurance products, they offer tax exemption on the sum assured at maturity and also on the premiums paid.
Rider options:
ULIP plan provides rider options for additional coverage to take care of your loved ones. The rider options such as accidental death rider, critical illness rider and term rider enables you to be rest assured that Wealth with Protection plans not only take care of your insurance needs but are also beneficial for your family.
Transparent structure:
You are kept informed about the value and number of fund units you hold. The insurance company intimates you about the percentage of premium that is invested along with the charges levied regularly. Various fund options: When someone chooses a ULIP insurance plan, one can decide the various fund options, based on the risk-taking appetite. In case one wishes to gain higher returns and have the capacity to take higher risks for the same, he/she can choose to invest in an equity fund. However, if one wishes to take lesser risk he/she can choose to invest in a debt fund.
Flexibility:
ULIP investment offers a lot more flexibility as compared to other insurance products as one can switch between funds and match their funding needs.
Partial withdrawal:
ULIP insurance enables the insurer to partially withdraw the amount in case of any need. However, the partial withdrawal can be chargeable and is subject to certain terms and conditions.

How does Wealth with Protection Plan work?

The math involved in ULIP insurance might seem complicated to some but, it is simple. Once you pay the premium, there are several more investors who invest in the same portfolio. The insurer further pools this money and after deducting the expenses, invests in the fund chosen by you. It could be either equity, balanced or debt funds. The total sum of money is further divided into units. The insurance company allocated these units to each investor in accordance to the amount invested. This units value is called NAV or Net Asset Value. The units NAV either increase or decrease based on the market value. On maturity of the plan, the insurer pays the fund value to the investors depending upon the market value. In case of your death, the insurer pays your beneficiary higher than the fund value or available fund value.

A ULIP plan can also be called as ULIP insurance plan or investment plan as one insures his/her life plus the insurer invests the amount in the funds. While choosing a plan you need to keep the following factors in mind to get a plan that would be the right fit for you:

Checking performance of plan:
It is always safe to research a little about the plan before you opt for it. One can refer the performance of last four to five years for a better understanding of the plan and the returns. The returns can be compared to benchmark indices like the Sensex of the BSE.
Evaluate risk profile:
It is important to evaluate one's own risk appetite and financial stability before you opt for any ULIP insurance plan. Young investors generally have a high risk appetite and choose equity based plans. If financial stability is of highest regard for someone then he/she must invest in debt instruments.
Charges levied:
It is essential to have a proper knowledge and information about charges levied in order to choose the right Wealth Creation Plan. Several charges like allocation charges, initial charges, and surrender charges need to be considered.
Understanding the plan:
Each ULIP plan is different from another one. It is better to understand the pros and cons of each. This enables one to pick the perfect fit plan.

Wealth with Protection or Ulip Plan, with the following features, is one of the best ways to grow your money in a short duration and achieve dual goals of wealth protection and stability:

Lock-in period:
ULIP Plans mostly comes up with a minimum lock-in period of 5 years. This period can be increased further as per the policy terms and condition. One can choose to discontinue and opt out even when he/she are paying premiums. In such case the accumulated sum is moved to discontinuance fund which holds one's lapsed policy will the lock-in period is over.
Lock-in period:
Switching option allows you to change the ratio of invested amount where you can shift your funds from equity exposure to debt or hybrid fund as per the risk exposure at different life cycle phases. Not only this, investors risk appetite too decides how much of the allocated amount would be invested into equities, while the rest should get invested in debt instruments.
Charges structure:
There are around 5 charges involved in ULIP plans - premium allocation charges, policy administration charge, mortality charge, fund management charge and surrender charge. For a long-term plan, people should not bother about these charges as the kind of returns these plans give in a long run should be able to recover all the charges borne in initial years.
Top-up facility:
This plan allows its customers to increase the amount of investment. This facility is called the top-up facility as the customers get to put an added amount over the existing policy. You can even avail tax benefits on these top-ups too.