All that you want to know about mortality charges in ULIP investment

August 13, 2018

Mortality Charge is the bone of contention in ULIPs because many consider it primarily an investment vehicle. However, the fact is that mortality charges are part of any insurance product and it is easy to see why. The insurer provides a life cover which is the sum assured payable to the nominee in case of death of the insured. The mortality charges are for providing the life cover under the policy. It is for this reason that an amount is deducted from the fund value as mortality charge.

Let's understand this with the help of an example. A 35-year old Mr X purchases a ULIP with an annual premium of Rs 100,000 and a sum assured of Rs 10,00,000. The death benefit payable in this policy is higher of sum assured or fund value. In case of unfortunate death of Mr X in the 4th year of purchasing the policy, the amount receivable by the nominee is higher of the fund value which is assumed to have grown to Rs. 5.5 lakhs or sum assured of Rs. 10 lakhs. In this example, the nominee will receive Rs. 10 lakhs as the death benefit. This risk of providing life cover is borne by the insurer, and mortality charges are deducted towards covering this risk.

How is Mortality Charge calculated?

Mortality Charge depends on factors such as age, amount of coverage (sum assured) of the policyholder, gender, smoking habits, health factors, etc. and is deducted on a monthly basis. It is generally lower for younger & healthier individuals. It increases, with the advancement of the policyholder's age.

The mortality rate (as on attained age) is per Rs 1,000 of the cover or the sum at risk. It is calculated monthly based on the following formula :

Mortality charge = mortality rate (for the attained age) x sum at risk/1000 x 1/12
What if you get back the entire Mortality Charge?

Looking at customer's expectation from a ULIP, Bajaj Allianz Life Insurance has pioneered the concept of Return of Mortality Charges (RoMC) with its recently launched products Bajaj Allianz Life Goal Assure & Bajaj Allianz Life Goal Based Savings. It makes ULIPs more investor-friendly and increases the return on maturity.

With this feature, the policyholder gets back all the mortality charge deducted over the course of the policy term at the time of maturity. This amount is added to the Fund Value at maturity. The only factor that the policyholder needs to ensure is that the policy is not surrendered or discontinued and all the premiums have been paid on time.

It is easy to see that mortality charge is an integral part of any insurance product. At the same time, features like RoMC enhance the benefit for the policyholders and help them to reach their life goals faster.

Popular Articles

Featured Articles
Goal Based Investment Planning For Family From Bajaj Allianz Life

Realise your Life Goals with a proper goal-based investment plan

Are you a young aspirant wanting to achieve something big in life? Like starting your own business or graduating from a premier institute or buying the bungalow of your dreams?.. Read more...

Monthly Investment Planning With ULIPs From Bajaj Allianz Life

Why monthly investments in ULIPs make sense?

The daily ups and downs in the stock markets can be incredibly unnerving for a retail customer and can dissuade them from investing in the markets. On March 1 this year, the..Read more...

Achieve your long-term goals with ULIPs

Achieve your long-term goals with ULIPs

For meeting your long term life goals, equity as an asset class is quite suitable. What is required is a disciplined approach over a period of time, and before you know it, your dreams.. Read more...

Investment Planning Guide For New Financial Year From Bajaj Allianz Life

How to plan your investments in the new financial year

We are just two months into the new financial year, and the time is still right to get your investment planning in place for the year ahead if not yet done. Taking stock of your past.. Read more...

Advantages of Investing Early

Advantages of investing early in ULIP plan

There goes a saying, 'The early bird catches the worm'. In literary sense, it means that a person will have an advantage if they do or start something early. In the world of investments it means that.. Read more...

Move a step closer to your Life Goals with prudent financial planning

Move a step closer to your Life Goals with prudent financial planning in online ULIP policy

The new calendar year has witnessed some volatility, especially for the broader markets (small/mid-cap space). In this scenario the retail investors have become... Read more...

Tips to overcoming market volatility with ULIP From Bajaj Allianz Life

How to tide over market volatility with ULIPs

The fear of market volatility often keeps retail investors away from equity investment. It is this fear that deprives millions of investors from the benefit of tax-efficient and often.. Read more...

Investing for the first time?

Investing for the first time? Here are some tips to help you make the right investment

If you are investing for the first time, the chances are that you will be bombarded with advice and tips from your friends and relatives, or you might be... Read more...

Top 5 myths associated with ULIP investments

Top 5 myths associated with ULIP investments

The perception of ULIPs as an expensive and a risky investment tool continue to persist. However, over the last few years, ULIP plans have emerged as a preferred investment vehicle... Read more...

5 factors to help you choose the best ULIP plan

5 factors to help you choose the best ULIP plan

Investments are no longer just about saving for the rainy day. We want to invest to get best possible returns on our investments to achieve our life goals and aspirations.... Read more...

What is a ULIP NAV?

What is a ULIP NAV?

A unique insurance-cum-investment tool, Unit Linked Insurance Plans (ULIPs), can help us meet our financial goals, while also providing insurance cover. These products are goal-oriented investments and their funds.... Read more...

What is a ULIP plan?

What is a ULIP plan?

It doesn't matter if your 20, 35 or 50. Whatever your age, you are sure to have certain life goals and dreams that you hope to fulfil. You may want to complete your MBA, or perhaps you want to make a down payment on your dream home.... Read more...

Avail Systematic Investment Plans for a more stable financial future

Avail Systematic Investment Plans for a more stable financial future

We all have various financial obligations like daily needs, school fees, and short trip with family or buying a fancy gadget where we require onetime payment for which money can be relatively collected easily... Read more...

    Contact Us

    Bajaj Allianz Life Insurance Company Ltd.
    Bajaj Allianz House, Airport Road, Yerawada, Pune - 411 006, Maharashtra

    Branch Locator

    Customer Care Timing :
    Monday to Saturday - 9.00AM to 7.00PM
    Customer Branch Visit Timings :
    9:00 AM to 3:30 PM on Weekdays

    Customer Care Toll free numbers :
    BSNL : 1800-233-7272 |
    TATA :
    1800-209-7272 |
    BHARTI :
    1800-103-7272 |
    RELIANCE :
    1800-3000-7272

    For online policy issuance / renewal :
    1800-209-4040

    Standard rate apply :
    (+91 020) 66026777

    Customer Service :
    customercare@bajajallianz.co.in

    Sales Enquiry :
    websaleslife@bajajallianz.co.in

    Cyber Cell :
    If you find any unauthorized or fraudulent sales material online, please mail us at :
    cyber.cell@bajajallianz.co.in

    BAJAJ ALLIANZ LIFE ONLINE INSURANCE PLANS

    Chat with us...