Unit Linked Insurance Plan

Unit Linked Insurance Plans (ULIPs) are hybrid policies that allow an individual to invest money in the capital market while also covering their life insurance needs. A ULIP premium is divided into two parts- the smaller portion is allocated to provide life insurance coverage for the policyholder and the larger portion is allocated to investments. Each policyholder pays a premium to the insurer, which is gathered into one large fund. As per the policyholders' interests, insurers invest this fund in shares, debt funds, or a balanced mix of both. As part of the insurance process, the insurer divides the total fund into various units each with a specific value. Depending on the premium paid, a person gets a certain number of units. As a result of this policy, the returns are subject to market fluctuations. Unit Linked Insurance Plans are also known as ULIPs. A ULIP combines investment and insurance. It is possible for policyholders to pay the premiums either annually or monthly under this plan. A portion of the premium is used to provide life insurance coverage, and the remainder is invested. The investments in these plans are subject to the risks associated with the capital market. It is the policyholder who bears the investment risk on his or her portfolio of investments. It is therefore recommended to make an investment decision based on your needs as well as your risk tolerance. Funds invested in the policy must also be considered for future needs by the policyholder. Furthermore, unit-linked plans are much more transparent. Fund management fees, allocation fees, and other charges are clearly stated upfront. The Unit Linked Insurance Plan allows investors to switch from debt to equity without running from pillar to post or worrying about charges. In 1971, the Unit Trust of India (UTI) introduced the first ULIP plan in India. Life Insurance Corporation followed this by offering ULIPs in 1989. Due to the high charges associated with ULIPs, many investors were initially discouraged from investing in them. Recent years have seen the introduction of new-age ULIP products by major life insurance companies such as Bajaj Life, HDFC, ICICI Pru, and Edelweiss Tokio which offer minimal charges and multiple features to ensure maximum returns and comprehensive protection for investors.

Benefits of Unit Linked Plan

• Adapt your investment strategy based on your changing needs
• Upon completion of the initial 5-year lock-in period, make partial withdrawals
• Invest additional sums of money (in addition to the regular premium) as needed.  

Features of Unit Linked Plan

Types of Unit-Linked Plan

Currently, there are way too many options available for expanding your investment portfolio. There are some investments with a high-risk profile and some with a higher return guarantee. The bottom line is that as investors, we are always on the lookout for products that meet both the above-mentioned criteria. It is for this reason that you should look for ULIP funds. One of the versatile funds to invest in is the Unit Linked Insurance Plan (ULIP). Capital market risks are associated with them. The ULIP Fund is quite similar to an insurance policy, but it offers many unique benefits. A dual-benefit instrument, it provides insurance cover while investing units of the premium in the capital market, creating wealth for the policyholder. In addition to being tax-free, ULIPs are the best long-term investment plans for those seeking both protection and growth. Let's start by reviewing the different types of ULIP Funds before getting into the details. 

What Are The Things You Need To Look At When It Comes To ULIP Funds?

• When it comes to ULIP funds, you must pay a one-time premium.
• Consider your financial plan when choosing ULIP funds, whether for yourself or your loved ones.
• When it comes to government bonds and company stocks, be aware of the risks involved.
• If you want to get the most out of your fund, you should reallocate your earnings according to the market conditions. 

Types of Life Insurance

Best Unit Linked Plan Companies

1. Max Life Fast Track Super Plan

In addition to market-linked returns, this unit-linked plan also offers Guaranteed Additions to increase fund value. This plan offers the following features and benefits: 

• Under the plan, premiums can be paid for the entire duration under the Regular Pay option, for a limited tenure under the Limited Pay option, or in one lump sum under the Single Pay option.
• Premiums can be invested according to two investment strategies: Systematic Transfer Plan and Dynamic Fund Allocation.
• Systematic Transfer Plan uses rupee cost averaging, and the net premium is initially invested in the Secure Plus Fund, and then every month, a portion is transferred to the Growth Plus Fund.In the Secure Plus Fund, premiums can be invested in five funds.
• The Dynamic Fund Allocation option invests the premium initially in the Growth Super Fund and then transfers the funds to the Secure Fund as the plan approaches maturity to protect the fund from market volatility. In both fund options, a specified ratio of the fund is maintained, and the ratio changes over time.
• From the 11th policy year, regular premium-paying plans earn Guaranteed Loyalty Additions of 0.3% of the Fund Value. This ratio increases by 0.02% every year.
• As part of the Settlement Option feature, the fund value can be taken as a lump sum or as installments over a period of 5 years after maturity.
• There is a minimum of 105% of all premiums paid until the date of death that is payable on death, whichever is higher.
• After 5 completed policy years, two free partial withdrawals with a minimum value of Rs.5000 are allowed every year. You can switch between funds 12 times a year for free. Every year, there are six free premium redirections that can be used to redirect future premiums into a different fund than the one originally selected.
• There is an income tax benefit on premiums paid under Section 80C and on claims under Section 10(10D) of the Income Tax Act.

2. Max Life Platinum Wealth Plan

Another unit-linked insurance plan that offers market-linked returns and life insurance coverage. This plan offers the following features and benefits: 

• In the Regular Pay option, premiums can be paid for the entire term of the plan, for a specific period of time under the Limited Pay option, or in one lump sum under the Single Pay option.
• Systematic Transfer Plan and Dynamic Fund Allocation are two investment strategies that can be used to invest the premium net of charges.
• By using rupee cost averaging, the net premium is initially invested in the Secure Plus Fund and then transferred every month to the Growth Plus Fund, under the Systematic Transfer Plan. In the Dynamic Fund Allocation option, the premium is initially invested in the Growth Super Fund, but as the plan matures, the funds are transferred to the Secure Fund in order to protect the fund from market volatility.
• As the plan progresses, the fund ratio changes according to the fund options.
• If the policyholder does not choose either of the investment strategies, he can choose from five fund options. Guaranteed Loyalty Additions begin after the 11th or 6th policy year, depending on the amount of premium paid. Every year, the additions accrue at 0.10 percent of the fund value and increase by 0.05 percent Furthermore. 
• A Guaranteed Wealth Booster is also paid based on the premium paid at the end of the 10th, 15th, and 20th policy years.
• Under the Settlement Option feature, the fund value can be paid as a lump sum or in installments over a period of 5 years after maturity.
• Upon death, the Fund Value or Sum Assured, whichever is higher, is payable, subject to a minimum of 105% of all premiums paid.
• In the Max Life Partner Care rider, the aggregate of all future premiums payable until the end of the term or until the insured reaches 60 years of age is payable immediately if the insured dies during the term.
• Every year, after five completed policy years, two free partial withdrawals are allowed with a minimum value of Rs.5000.
• A maximum of six free premium redirects are allowed every year to redirect future premiums into a different fund than the one originally selected.
• Section 80C and Section 10(10D) of the Income Tax Act provide income tax benefits for premiums paid.

3. Max Life Maxis Super Plan

Here are some of the features and benefits of a strategic unit-linked insurance plan: 

• The premium under the plan is payable for a limited duration only. The premium net of charges is invested according to the Dynamic Fund Allocation option. As the plan approaches maturity, the funds are transferred from the Growth Super Fund to the Secure Fund to protect the fund from market volatility. 
• Both fund options maintain a specified ratio of the fund, which changes as the plan progresses. Premium investments are available in five funds.
• When the fund matures, a fund value is paid, which can be taken in lump sums or in installments over a period of 5 years under the Settlement Option feature, or as a multiple of the annual premium paid. The Sum Assured can be selected at 11, 15, or 20 times the annual premium paid.
• A minimum of 105% of all premiums paid until death is required to pay the Fund Value and Sum Assured.
• You may withdraw up to Rs.5000 in two free partial withdrawals every year after completing five policy years.
• You can switch between funds 12 times a year for free.
• There is a limit of six free premium redirections per year to redirect future premiums into a different fund from the one that was initially selected.
• Premiums paid under Section 80C and claims under Section 10(10D) of the Income Tax Act are eligible for income tax benefits.

4. HDFC life insurance

1. HDFC Click 2 Retire Plan 

The following features are available in an online ULIP plan: 

• According to the plan, the Vesting Benefit will equal {101% + 1% * (policy Term premium paying term)} total premiums paid.
• A death benefit will be paid based on the higher of the fund value on the date of death or 105% of all premiums paid until the date of death.
• If the policyholder is under 55, the vesting age can be postponed. Pension Equity Plus, Pension Income, and Pension Conservative funds are the three types of funds you can choose from.
• Section 80C and Section 10(10A) of the Income Tax Act provide income tax benefits on premiums paid under Section 80C and on the commuted value of the fund.
• Upon maturity, 1/3rd of the fund value can be commuted, which means it can be withdrawn in cash, and the remaining 2/3rd can be used to draw a pension or to purchase an annuity.

2. HDFC Life Pension Super Plus

The following features are included in the pension plan:

• The company pays the higher of the fund value or an assured benefit of 101% upon vesting.
• After vesting, the policyholder can purchase a joint life annuity from the company, which guarantees a regular income for the rest of the policyholder's life or the life of his spouse. 
• Annuity payments can also be made from the remaining 1/3rd of the fund if the policyholder commutes 1/3rd of the fund.
• The fund receives 102.5% of premiums paid from the 11th year onward.
• A death benefit of 105% of all accumulated premiums paid till death is paid by the company regardless of whether the fund value or total premiums paid accumulated are higher.

3. HDFC Life Single Premium Pension Super Plan 

ULIP plan with a single premium that offers the following features:

• When the plan vests, the company pays the higher of the fund value or 101% of the single premium paid.
• In case the policyholder is under 55 years of age, the vesting age may be extended. Once vested, the policyholder has the option to purchase an annuity from the company with multiple options, such as a joint-life annuity which guarantees regular income until either the policyholder or his spouse dies.
• Alternatively, the policyholder can commute 1/3 of the fund and receive annuities from the remaining portion or purchase another Single Premium deferred annuity from the company.
• In the event of death, the higher of the available fund value or 105% of the premium is paid to the nominee, who may choose to receive annuities or withdraw the entire amount.

4. HDFC Life Click 2 Invest 

With the following features, this unit-linked plan is designed to create wealth: 

• A maturity payment is made based on the applicable fund value.
• The nominee receives the higher of the fund value on the date of death or the Sum Assured or 105% of all premiums paid up until the date of death.On maturity, the proceeds can be withdrawn in five annual installments.
• There are eight types of funds to choose from. There are four free partial withdrawals and switches allowed each year. Premiums can be redirected to new funds by using the premium redirection option.
• Under the plan, there are no premium allocation charges, administration charges, or discontinuation charges.
• Premiums paid under Section 80C and claims under Section 10(10D) of the Income Tax Act are taxable.

5. HDFC Life ProGrowth Plus

This ULIP plan offers the following features: 

• Life Option and Extra Life Option are the two benefit variants available. There are four fund options to choose from Post maturity, the applicable fund value can be accessed in installments over the next five years.
• When a policyholder dies, the nominee receives the higher of the Sum Assured net of partial withdrawals made within two years before death or the Fund Value if he or she is under the age of 60. If attained age was equal to or more than 60 years old, higher of the Sum Assured net of partial withdrawals made after age 58 years or Fund Value is payable subject to a minimum of 105% of premiums paid.
• If the insured meets with an accident, in addition to the above-mentioned death benefit, an additional benefit equal to the applicable Sum Assured will be paid. Under Extra Life, a Rider for Accidental Death Benefit is inbuilt.
• Each year, partial withdrawals and switching are allowed. Future premiums can also be redirected through premium redirection.
• Premiums paid under Section 80C and claims under Section 10(10D) of the Income Tax Act are tax deductible.

5. TATA AIA life insurance

6. ICICI PRU  life insurance