1. Life Insurance Guide /
  2. ULIP /
  3. Top 5 Myths about ULIP

Top 5 myths associated with ULIP investments

August 07, 2018

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 to not only provide insurance cover but to also gain advantage of equity investment in an individual's portfolio.

Here are the five key myths associated with ULIPs :

Myth 1 : ULIPs are expensive
Fact : Charges in ULIPs have reduced significantly over the years and are capped making them more cost effective for customers

The new age ULIPs have evolved a lot from their predecessors. Charges in new-age ULIPs are spread over the policy term. The fund management charge has been capped by the regulator at 1.35% and other charges like policy administration charge and premium allocation charge have reduced significantly over the years.

Besides, Bajaj Allianz Life Insurance recently introduced Return of Mortality Charge (ROMC) feature which returns the entire mortality charge paid by the policyholder at the time of policy maturity. Such features further bring down the cost of ULIPs significantly.

Myth 2 : Market volatility brings down insurance cover
Fact : Life cover under the ULIPs remains unaffected regardless of market unpredictability

There is a belief that the benefit payable in case of death under ULIPs shrinks if the market plunges. However, the same is not correct. In case of the death of the policyholder during the policy term, higher of Sum Assured or the fund value, is paid. In some types of ULIP investment, the death benefit is sum assured plus fund value. Few products also have the option of various riders, including accidental death benefit or critical illness, to get the best-possible insurance cover.

Myth 3 : ULIPs are risky
Fact : A policyholder has an option to select the fund based on his risk-taking appetite

ULIPs come with various fund options including liquid and debts fund for the conservative investor, and equity funds of high and moderate risk. One can opt for an option based on their risk appetite. There are products which have an option of fund switching, that enable you to switch between funds in times of market upturns or downturns for maximum benefit.

Myth 4 : You lose all money if you are unable to pay premium
Fact : You do not lose all your money

Sometimes your financial circumstances might make it tough to pay premiums. A common myth is that the policyholder stands to lose the entire invested amount if he/she is unable to pay the premium. But this is not true.

In the event of non-payment of premium in ULIPs in first 5 years, the policy status is changed to discontinue. The fund value is moved to a discontinued fund, where the fund continues to earn returns, subject to deduction of discontinuance charges. Hence in the event of non-payment, the premiums already paid are not forfeited as the discontinuance value is payable after completion of 5 years of lock-in period.

If the policy has completed 5 years, the customer has an option of continuing the policy as a paid-up policy. The customer also has the option to surrender the policy without any surrender charges after payment of at least 5 premiums.

Myth 5 : ULIPs give low returns
Fact : If chosen wisely, it provides best returns from the market

New- age ULIPs have emerged as a front runner for customer who want to invest in the equity market and if we were to analyse fund performance of ULIPs, it has given consistent returns over the long-term. Further, ULIPs are also exempt from long term capital gain tax.

ULIPs provide significant capital appreciation over a long term allowing the policyholder to achieve their life goals. Features such as tax benefits, low charges, switching and more have transformed ULIPs into a one of the best investment option for the investor who wants to gain the maximum return on his/her investment to live the life of his/her dreams!

Learn more about ULIP plans and investment tips to achieve your life goal with Life Insurance Guide from Bajaj Allianz Life.

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...

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...

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...

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...

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...

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...

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...

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...

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

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

Mortality Charge is the bone of contention in ULIPs because many consider it primarily an investment vehicle. However, the fact is that mortality charges... 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 |

    For online policy issuance / renewal :

    Standard rate apply :
    (+91 020) 66026777

    Customer Service :

    Sales Enquiry :

    Cyber Cell :
    If you find any unauthorized or fraudulent sales material online, please mail us at :


    Chat with us...