An Overview of ULIPS

8/8/2019 An Overview of ULIPS

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An overview of Unit linked insurance plans

(ULIPS)



Agenda

Introduction to ULIPS

Benefits of a ULIP

Charges in a ULIP

Break-up of the charges in aULIP



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.



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.



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



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



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.



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.



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.



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.



Charges in a ULIP

Premium Allocation Charge

Mortality Charges

Fund Management Fees

Policy/ Administration Charges

Surrender Charges

Fund Switching Charge



Break-up of charges

Invested amount

Premium allocation charges

Fund management charges

Policy administration charges

Mortality charges



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.



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



Fund Management Fees

These are fees levied for

management of the fund(s)

and are deducted beforearriving at the Net Asset Value

(NAV) .



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.



Surrender Charges

A surrender charge may be

deducted for premature

partial or full encashmentof units wherever

applicable, as mentioned in

the policy conditions.



Fund Switching Charge

Generally a limited number

of fund switches may be

allowed each year without

charge, with subsequent

switches, subject to a

charge.



Documents

An Overview of ULIPS