ULIP - Unit Linked Insurance Plan
IN ULIP, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY POLICYHOLDER. ULIP bundles the benefit of life cover and market-linked investment returns in a single policy.
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What is ULIP?
Importance of ULIP
Making the right choice in life has multiple rewards. When you plant a seed, not only does it grow into a fruit-bearing tree, but also provides shades to keep you cool. Think of ULIPs in a similar way. Unit Linked Insurance Plans mature into providing you with the fruits of investment and the cool shade of life protection. Following are the reasons why ULIP is important:
- Regular and Single Premium ULIP: In a regular premium ULIP, you need to pay premiums over a period of time. On the other hand, in a single premium ULIP, you pay the entire premium at one go. You can choose the one as per your income and cash flow.
- Life staged based and Non-life stage based ULIP: Needs at different stages of life are different, isn’t it? Life stage based ULIPs invest your money accordingly. For example, when you are young and single, you may have a higher risk appetite, and, therefore, a higher allocation is towards equities.
As you grow old, the equity allocation reduces. The strategy ensures asset allocation matches your age and financial requirements. However, this is not the case with a non-life stage-based plan. You choose the funds as per your risk appetite and can switch between them when desired.
- Guaranteed and Non-Guaranteed ULIP:Capital protection is the objective of guaranteed ULIP and hence it has limited equity exposure. On the other hand, a non-guaranteed ULIP offers you a range of funds to choose from as per your risk tolerance and financial goals. In these ULIPs, you can opt for a high equity exposure for higher returns in the long run.
These ULIPs help you save and build a large corpus for your child’s higher education and in case of an unfortunate event, the insurer pays a fixed lump sum that helps your family meet immediate requirements. Also, some plans offer the facility to partially withdraw to fund important education milestones of your child’s life.
While the purpose of the above-mentioned ULIP plans may differ, each one of them help you in disciplined savings and investments to achieve your set goal.
- LifeCycle Option -This option allows us to manage and administer your investment portfolio on your behalf and according to your risk profile.
- Smart Option - Under this option, your portfolio will be structured as per your maturity date and risk profile. Over time the allocation is managed such that it will automatically switch from riskier assets to safer assets progressively as your plan approaches maturity.
- Systematic Transfer Option - This option safeguards your wealth against the market volatilities and is available only if you have opted for annual mode. Under STO, at inception you can choose to transfer the fund on monthly basis or weekly basis. You may choose up to 4 funds for your premium to be transferred to.
- Return Optimiser Option - This option enables you to take advantage of the equity market, protect your gains from the future market volatility and create a more stable sequencing of investment returns.
- Self-Managed Option - Under this option, you get access to our well-established suite of 16 segregated funds, complete control in how to invest your premiums and full freedom to switch from one segregated fund to another. Kindly refer to sales brochures for detailed explanation.
Features of ULIPs
ULIP is a dual benefit insurance cum investment policy. The policy gives you life insurance protection and helps you to attain your long term financial goals. Below are the key features of ULIP:
Who should buy ULIP?
ULIP is for everyone who has mid to long term goals of savings and wants to grow their money. Who doesn’t want it! Below are a few individuals that should consider investing in ULIPs:
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 unit 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.
Do you know ULIPs also allow you to switch between equities and debt and vice-versa if you wish to do so. If equity markets are not doing well, you can switch to debt to preserve your gains. On the other hand, if you have a high-risk tolerance, you can move from debt to equity. This flexibility has made ULIP policies highly popular.
For example, when equities are doing good, you could invest more in them and less in debt. On the contrary, when the markets are down, you can shift your investments from equities to debt to preserve your gains. Thus, by switching wisely and spreading your investments across asset classes, you can make meaningful gains.
Did you know that the great Albert Einstein famously remarked it as the eighth wonder of the world? With compounding, the interest generated is reinvested with the principal amount that adds to your wealth.
This ensure the gains made over the year are protected from getting eroded due to market volatility.
Riders are additional covers that can be purchased along with a ULIP. Riders enhance the scope of coverage under a basic ULIP plan at a nominal premium amount. There are multiple options one can choose as per the requirement.
Frequently Asked Questions
Find out more about ULIP and explore how it will benefit you.
- Equity Funds: The premium under the equity funds are invested in the equity market. The risk associated with this type of fund stands tall.
- Debt Funds: Debt funds generate returns for investors by investing money in bonds and fixed-income securities. So the risk factor is low.
- Combined Funds: When the premium is balanced between the debt and the equity funds to minimize the risk of investors, it is called combined funds.
- Protection cum investment in a single product
- Flexibility of investments in your choice of funds
- Partial withdrawal facilities for the time when you need liquidity in emergencies
- Tax Benefits³
For example, you buy ABSLI Wealth Assure Plus ULIP to protect your income against death, disease, and disability. Your current age is 40 years and you want the insurance for yourself. For a policy term 15 years, premium paying term 10 years, and payment frequency monthly, basic annual premium will be Rs.24,000 for a sum assured of Rs.2,40,000/- under Smart Option
With ULIP, you don’t have to buy different products for life cover and investment. You get it in a single product. Returns on investment under ULIP plans are based on market performance. This in turn pushes the policyholder towards a higher chance of building a sizable corpus for important life goals, if you stay invested for the long term.
- Premium Allocation Charge: Premium allocation charge is the percentage of first year premium charged by the insurance company before allocating the policy. Say for example 5% is the premium allocation charge and your total premium is Rs.40,000/-. The premium allocation charge of Rs.2000/- will be deducted and the rest Rs.38,000/- will be invested.
- Policy Administration Charge: Policy administration charge is the fee charged by the insurance company for the administration of policy. These charges are deducted by cancelling the units in proportion from funds you have selected.
- Mortality Charge: The charge is imposed by the insurance company to provide the death cover to the policyholder.
- Fund Management Charge: The charge is imposed by the insurance company as the percentage of funds on the account of management of funds. The charges are deducted before arriving at the Net Asset Value. The maximum charges allowed is 1.35 % per annum of the fund value and is charged daily.
- Surrender Charge: If the policyholder surrenders the policy before time. Surrender charges are a percentage of fund value and premium. The surrender charges in ULIP for the first four years will range from Rs.1000 -Rs.3000, depending on the premium paid. After the fifth year, no surrender charges will be levied.
For a long-term plan, people should not bother about these charges as the kind of returns these plans give in the long run should be able to recover all the charges borne in the initial years.
In addition to these choices, you also get the flexibility to switch between these various types of funds at any point during your investment term.
For instance, you could switch from equity funds to debt funds when the market sentiments appear unfavorable, and thereby ensure that your plan for wealth creation doesn't hit a roadblock. And when the equity markets are favorable, you could opt for a high proportion of equity investments in your ULIP portfolio. Or, you could choose to invest in hybrid funds that consist of a mix of both equity and debt to diversify your risk and protect your investments from market fluctuations. Also, you could increase your ULIP corpus through a top-up investment. Whenever you have additional savings, you can put more money into your ULIP. Ideally, investors choose this when their ULIP is already performing well and they’d like to take advantage of the situation to maximise their returns.
The NAV is the per unit price of a fund.
You can assess the fund value by visiting https://lifeinsurance.adityabirlacapital.com/about-us/know-our-funds.
- Spread your ULIP investments across various asset classes
- Switch between equity & debt funds basis your risk appetite & financial goals
- Stay invested for a long term & benefit from the power of compounding
- Align your investments with financial goals
1 ABSLI Wealth Aspire Plan. Basic annual premium: ₹40,000. Sum assured: ₹4,00,000, Premium Payment Term 5 years, Policy Term 10 years, Returns ₹301,632/- Refer to policy brochure for more details.
2 Tax benefits are subject to changes in tax laws. Kindly consult your financial advisor for more details
3 ABSLI Wealth Secure Plan is a whole life policy. Age 30 years healthy male, You give ₹30,000/- for 5 years(₹1,50,000 in total), You get ₹94,95,186/-depending on the funds(here chosen mnc fund: 50%, pure equity fund: 50%). Life Cover ₹3,00,000, Premium Paying Term: 5 years Annual, Investment Option: Self Managed. Refer to policy brochure for more details.
4 ABSLI Wealth Assure Plus plan for 30 years of a healthy male. Plan type: Classic. Investment option: Smart option. Risk Profile: Moderate. Payment frequency: Yearly. Basic annual premium: ₹24,000. Policy Term: 15 years. Premium paying term: 10 years. Refer to policy brochure for more details.
5 ABSLI Fortune Elite Plan. Give Annual premium: ₹75,000 for 5 years. Get ₹11,20,674/- @8%return, Life Cover ₹7,50,000, PPT: 5 years Annual, Policy Term 20 years, Investment Option: Self-managed (mnc fund: 50%, pure equity fund: 50%).Refer to policy brochure for more details.
6 ABSLI Wealth Max Plan. Policy term: 5/10/15/20 years. Basic Premium: Minimum ₹1,00,000 for Policy Term 5 & 10 years; Minimum ₹2,00,000 for Policy Term 15 & 20 years. Basic Sum Assured: 1.25 / 5 / 10 times the Basic Premium. Refer to policy brochure for more details.
7 ABSLI Wealth Infinia. Annual Premium: ₹5,00,000, Investment Option: Self Managed (mnc fund: 50%, pure equity fund: 50%), Policy Term 10 years, Regular Pay, Plan Option: Milestone Variant, Sum Assured Option: 10 times.
8 As per annual audited figures submitted to IRDAI for the period FY 20-21
9 As per annual audited figures submitted to IRDAI for the period FY 20-21
10 Provided all due premiums are paid.
ABSLI Wealth Infinia is a unit-linked non-participating individual life insurance savings plan. (UIN: 109L129V01)
ABSLI Wealth Assure Plus is a non-participating unit linked life insurance plan. (UIN: 109L120V02)
ABSLI Wealth Max Plan is a non-participating unit linked life insurance savings plan. (UIN: 109L073V05)
ABSLI Wealth Secure Plan is a non-participating unit linked life insurance savings plan (UIN: 109L074V05 )
ABSLI Fortune Elite Plan is a non-participating unit linked life insurance plan. (UIN: 109L090V04)
ABSLI Wealth Aspire Plan is a non-participating unit linked life insurance plan. (UIN:109L100V05)
The linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender/withdraw the monies invested in Linked Insurance Products completely or partially till the end of the fifth year from inception. This policy is underwritten by Aditya Birla Sun Life Insurance Company Limited (ABSLI). Aditya Birla Sun Life Insurance, ABSLI Wealth Max Plan, ABSLI Wealth Infinia, ABSLI Wealth Assure Plus, ABSLI Wealth Secure Plan, ABSLI Fortune Elite Plan and ABSLI Wealth Aspire Plan are only the names of the Company and Policy respectively and do not in any way indicate their quality, future prospects or returns. The name of the funds offered in this plan does not in any way indicate their quality, future prospects or returns. The charges are guaranteed throughout the term of the policy unless specifically mentioned and subject to IRDAI approval. The value of the segregated fund reflects the value of the underlying investments. These investments are subject to market risks and change in fundamentals such as tax rates etc affecting the investment portfolio. The premium paid in unit linked life insurance policies are subject to investment risk associated with capital markets and the unit price of the units may go up or down based on the performance of segregated fund and factors influencing the capital market and the policyholder is responsible for his/her decisions. There is no guarantee or assurance of returns above the guaranteed returns from the segregated funds. GST and any other applicable taxes levied as per extant tax laws shall be deducted from the premium or from the allotted units as applicable. An extra premium may be charged as per our then existing underwriting guidelines for substandard lives. For further details please refer to the policy contract. Tax benefits are subject to changes in the tax laws" For more details and clarification call your ABSLI Insurance Advisor or visit our website and see how we can help in making your dreams come true. Insurance is the subject matter of solicitation. ADV/6/22-23/508