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Maximize Your Savings with ULIP Plans: Features & Charges

Saving money is important. But keeping your family safe is also important. What if you could do both in one plan? That’s where a ULIP can help. A ULIP (Unit Linked Insurance Plan) is a smart way to get life cover to protect your loved ones financially. Many people now prefer ULIP because it offer dual benefits. Read More


In this blog, we will explain how you can manage your ULIP, what charges to expect, and answer common questions. Whether you are just starting to save or planning for the long term, this guide can help you understand ULIPs better. Read Less

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Written ByPalak Bagadia
AboutPalak Bagadia
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Palak Bagadia, Associate – Digital Marketing at Bajaj Allianz Life, with experience spanning content and performance marketing, recruitment, employee engagement in the BFSI industry, with a strong understanding of the insurance sector.
Reviewed ByRituraj Singh
AboutRituraj Singh
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Rituraj Singh,With over 6.5 years of experience in the insurance industry, Rituraj Singh, Manager- Product & Brand Marketing at Bajaj Allianz Life Insurance overlooks new product launches, compliance, and brand projects, leveraging artificial intelligence and technology to enhance outcomes.
Written on: 25th July 2025
Modified on: 29th July 2025
Reading Time: 20 Mins
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How Do I Manage My ULIP Policy?

Managing your ULIP is easy. You can choose how your money is used. There are three main ways:

  1. Self-switching – You can switch funds basis the market performance , your risk appetite and life goals.
  2. Automatic switching – Some ULIPs offer an automatic or “asset allocation” feature where the fund manager adjusts your portfolio over time to reduce risk as you approach your goal.

This way, you stay in control and can adjust the plan as per your goals.


What ULIP Charges Should I Expect?

A ULIP is a plan that gives life cover and helps your money grow through market-linked funds. However, there are charges associated with the functioning of this plan. These include fund management charges, premium allocation charges, administration charges, switching charges, mortality charges, premium redirection charges, partial withdrawal charges etc.

It is important to know about these charges to get a better understanding about ULIPs. Let’s now look at each charge in simple words.


Fund Management Charge

This fees is taken by the insurance company to manage the market linked funds. When you purchase a ULIP, a part of your premium goes into different types of market linked funds like equity, debt, balanced funds. These funds are handled by professionals called as fund managers. The fund manager aims to optimize your investment returns by actively managing the portfolio in line with prevailing market conditions. For this service, a small charge is taken.


Premium Allocation Charges

Premium Allocation Charge refers to the portion of the premium deducted upfront by the insurer before investing the remaining amount into the ULIP fund. This charge typically involves Initial policy issuance costs, administrative expenses etc.

Let us understand some points on premium allocation charge:

  • Deducted upfront: This is a charge levied at the time of receipt of premium.
  • Allocation Rate : The portion of your premium that remains after charges—called the allocation rate—is used to buy units in the investment fund linked to your policy. .
  • Varies by plan: Charges differ across insurers and ULIP plans.

For example, if you pay ₹10,000 and the premium allocation charge on your policy is 5%, then ₹500 is deducted as premium allocation charge, and the rest goes into your savings fund.

Always check the policy brochure to know the exact price charge.


Policy Administration Charges

This is a small charge that the insurer deducts to run your ULIP policy smoothly every month. It is called an administration charge. This charge helps with managing all the day to day operations of your policy like keeping records, sending you updates, maintaining your account etc.

This charge may be expressed as a fixed amount, a percentage of the premium, or a percentage of the sum assured. This is usually deducted automatically from the unit fund by cancelling units for equivalent amount. However, it is always beneficial to review the plan details to understand all applicable charges beforehand.

Some newer ULIPs offer minimal administration charges to make the plan more affordable. Always read your policy document carefully to understand how this charge applies.


Switching Charges

One of the features of a ULIP is that you can switch funds based on your risk appetite , market performance , life goals . You may want to switch from a high-risk fund to a low-risk fund or vice versa, depending on the market. This is called a “fund switch.”

Most plans allow a few free switches every year. For example, you might get 2 or 4 free switches. After that, if you switch again, a small charge is taken. This is called switching charge.

Switching helps you make the most of the market conditions. Always check how many free switches your plan offers.


Mortality Charges

Mortality charges are the fees charged for the life insurance cover provided under your Unit Linked Insurance Plan (ULIP). When you purchase a ULIP, your premium is divided into two parts: one part is allocated towards providing life insurance coverage, and the other part is invested in market-linked funds for savings and wealth creation. The mortality charge is the cost you pay to ensure that your family receives a financial benefit in case of your unfortunate demise during the policy term.

Mortality charges are primarily based on your age, but insurers also consider factors such as your health status, gender, and the sum assured you opt for. In the case of ULIPs, these charges are usually deducted on a monthly basis from the fund value.


Premium Redirection Charges

Premium redirection in a ULIP means changing the allocation of your future premium payments to different fund options within your policy, subject to policy terms and conditions. For example, if your premiums were previously invested in a high-risk equity fund but now you want them directed to a safer debt fund, you can use the premium redirection feature to make this adjustment. This allows you to adapt your investment strategy to your changing goals or market conditions.

Some ULIP plans allow you to redirect your premiums a certain number of times for free. However, if you exceed this limit or if your insurer charges for every redirection, a premium redirection charge may apply.


Partial Withdrawal Charges

ULIPs are meant for long-term savings, but sometimes, you may need some money before the policy ends. Maybe for a medical emergency or school fees. In that case, ULIPs allow you to take out a small part of your fund value post the lock in period of 5 years . This is called a partial withdrawal.


FAQs

Is ULIP a good idea?

Yes, ULIP can be a good idea if you want life protection and want to invest in market linked funds. A part of your premium is used towards life cover while the rest is invested in market linked funds. So, it’s like building a corpus for the future while also keeping your family safe.


How does a ULIP differ from term insurance plans?

With a term Life insurance plan you ensure financial security for your loved ones in case of your untimely demise. However, there are no payouts in case you (if the policy is in your name) outlive the policy tenure. ULIP is a plan that combines fund growth with life insurance. It means, you can provide your loved ones with security of life insurance and build a corpus alongside.


What are the advantages of investing in a ULIP?

A ULIP plan has several advantages. You not only receive life cover to financially secure your family, but also the opportunity to grow your savings with market-linked funds. You receive the additional benefit of tax savings under Section 80C under the old tax regime. After 5 years, you make partial withdrawals , subject to policy terms and conditions . You have the option to switch your funds depending on your life goals, risk appetite , market conditions etc.


Can I switch between different funds within a ULIP?

Yes, you can switch your investments between different market linked funds within a ULIP, subject to policy terms and conditions. This feature allows you to transfer your money from one fund type (such as equity, debt, or balanced) to another, based on your changing financial goals, risk appetite, or market conditions.

Most ULIPs offer a certain number of free fund switches each year, depending on your policy terms. After exhausting the free switches, a nominal charge may apply for additional switches.

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IN THIS POLICY, THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER

The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year.

ULIPs are different from the traditional insurance products and are subject to the risk factors. The premium paid in ULIPs are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

 The views stated in this article are not to be construed as investment advice and readers are suggested to seek independent financial advice before making any investment decisions. For more details on risk factors, terms and conditions please read the sales brochure & policy document (available on www.bajajallianzlife.com) carefully before concluding a sale. Bajaj Allianz Life Insurance Company Ltd., Regd. office Address: Bajaj Allianz House, Airport Road, Yerawada, Pune - 411006, Reg. No.: 116, CIN: U66010PN2001PLC015959, Call us on toll free No.: 1800 209 7272, Mail us: customercare@bajajallianz.co.in

Tax benefits as per prevailing Section 80C (under old tax regime) of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy

BJAZ-WEB-EC-16220/25

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Disclaimer

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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%%Above illustration is for Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V03) considering Male aged 25 years | Non-Smoker | Policy Term (PT)– 30 years | Premium Payment Term (PPT) – 30 years | Sum Assured opted is Rs. 1,00,00,000 | Online Channel | Standard Life | 1st Year Premium is Rs. 6,238. 2nd Year onwards premium is Rs. 6,659. Total Premium Paid is Rs. 1,99,349 | Medical Rates | Yearly Premium Payment Mode | Death benefit opted is lumpsum payout and monthly installments (Lumpsum Payout Percentage : 45, Income Payout Percentage : 55) | Premium shown above is exclusive of Goods & Service Tax/any other applicable tax levied, subject to changes in tax laws, and any extra premium and is for illustrative purpose only. This is inclusive of all the discounts mentioned above.

##Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

@Term Insurance plan bought online directly from Bajaj Allianz Life Insurance has no commissions involved.

^^The Return of Premium amount is total of all the premiums received, exclusive of extra premium, rider premium and GST & /any other applicable tax levied, subject to changes in tax laws
Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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Disclaimer

The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year.

ULIPs are different from the traditional insurance products and are subject to the risk factors. The premium paid in ULIPs are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Bajaj Allianz Life Insurance Company Limited is only the name of the Life Insurance Company and Bajaj Allianz Life Goal Assure II- A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN No.: 116L180V02) is only the name of the unit linked insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

Bajaj Allianz Life Goal Assure II - A Unit-linked Non-Participating Individual Life Savings Insurance Plan (UIN: 116L180V02)

**Return of Mortality Charges at Maturity (ROMC) is payable at maturity, provided all due premiums have been paid

Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116

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Disclaimer

Bajaj Allianz Life eTouch- A Non Linked, Non-Participating, Individual Life Insurance Term Plan (UIN: 116N172V04)

*Tax benefits as per prevailing Section 10(10D) and Section 80C of the Income Tax Act shall apply. You are requested to consult your tax consultant and obtain independent advice for eligibility before claiming any benefit under the policy.Above Tax benefit is calculated considering deduction of Rs. 150,000 and applicable tax rate of 31.20%.

~Individual Death Claim Settlement Ratio for FY 2023-2024

1Premium Holiday has to be selected at inception to avail this benefit and also depends on other policy terms & conditions


Bajaj Allianz Life Insurance Co. Ltd. | IRDAI Reg. No. 116


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