Life Goals Loading…

Have us call you

Please enter a Name
Please enter a Mobile No.
Please select a option
Please select a option

Thanks for sharing your details, A Sales representative from
Bajaj Allianz Life will contact you shortly.

We request you to connect with us in our next business working hours , 9 am to 9 pm (Monday to Saturday). Thank you for your understanding.

A Guide to ULIP charges to invest better in them

A ULIP charges guide from Bajaj Allianz Life

A Guide to ULIP charges to invest better in them


calender-blue

Dec 05, 2018

By : Bajaj Allianz Life

Investing for your life goals is the key to turn those goals and aspirations into reality. As a responsible investor, it is important to set aside a portion of your income every month for your goal-based investments. Unit Linked Insurance Plans (ULIPs) have emerged as one of the preferred mode of investing for your life goals as it serves the dual purpose of earning good returns through marked-linked funds and at the same time ensuring protection to your family. Like other financial products, ULIP have charges associated with it too. But the good thing is these ULIP charges have reduced over the years because the Insurance Regulatory and Development Authority of India (IRDAI) has capped these charges.

In this article, let's discuss about the different ULIP charges :

1. Premium Allocation Charge

Premium Allocation Charge is an upfront charge deducted from the policyholder's premium. It is levied as a percentage of premium. These charges account for the initial expenses incurred by the company in issuing the policy, e.g., cost of underwriting, medicals and expenses related to distributor fees. After deduction of these charges, the remaining premium gets invested in the funds chosen by the policyholder.

2. Mortality Charge

Apart from investing in market-linked funds, ULIPs primarily provide life cover. That means the insurance company provides financial compensation to the insured's family in case of a sudden death. For providing this life cover, the insurance company levies a mortality charge. The amount payable as mortality charge can vary based on different factors like age, health and coverage amount sought under the life insurance plan.

Today, there are a few new-age ULIPs that return back the mortality charges deducted over the years, to the customer at the time of maturity. This not only makes the new-age ULIPs cost effective, but also enhances the value of the policyholder's corpus on maturity, making it more customer-friendly

3. Fund Management Charge

When policyholders invest their money in market-linked funds through a ULIP, a fund management expert manages their money so that they can earn better returns. For this service, insurance companies levy a fund management charge. As per IRDAI, the insurer can levy a maximum charge of 1.35% of the fund value per annum. Usually the fund management charge for a bond or liquid fund is on the lower side

4. Policy Administration Charges

These charges are deducted on a monthly basis to recover the expenses of maintaining the policy including record keeping, paper work, services, etc. The policy administration charge is deducted through redemption of units at the prevailing unit price, from the policyholders unit account.

5. Surrender Charge

ULIPs have a mandatory lock-in period of 5 years which allows policyholders to reap its long-term investment benefits. But in case a policyholder chooses to discontinue paying premiums before the lock-in period ends, there will be a policy discontinuance charge or a surrender charge levied. The surrender charges varies, depending on the year in which the policyholder has surrendered the policy. As per IRDAI rules, for regular premium policies, the maximum discontinuance charge for the first year is ` 6,000. This is followed by ` 5,000, ` 4,000 and ` 2,000, during the 2nd, 3rd and 4th year respectively. However, if the policyholder decides to surrender the policy after it has completed 5 years, there are no surrender charges provided the policyholder has paid at least 5 annual premiums.

It is best to have knowledge of the ULIP charges associated with this investment, in order to maximise the benefits from your ULIP policy. It will give you a better understanding of how your funds are being invested and help you make sound and informed investment decisions.

Bajaj Allianz Life Videos

Video Icon

Bajaj Allianz Life Goal Assure

Bajaj Allianz Life Goal Assure - A ULIP Investment Plan To Achieve Life Goals

Video Icon

Valentine's Day

Valentine's Day

Video Icon

Bajaj Allianz Health Care Goal

A Comprehensive Health Insurance Plan with Critical Illness Cover | Bajaj Allianz Life Health Care Goal

Video Icon

#36SecPlankChallenge video

Promote Healthy Living for a Better Tomorrow with our #36SecPlankChallenge

Calculators

Use our smart calculators to plan and achieve your Life Goals

  • The Tax Calculator

Contact Us

Bajaj Allianz Life Insurance Company Ltd.

Bajaj Allianz House, Airport Road, Yerawada, Pune - 411 006, Maharashtra

Customer Care Timings :

Monday to Saturday - 9:00 AM to 7:00 PM

Customer Branch Visit Timings :

Weekdays - 9:00 AM to 3:30 PM

Saturday - 9:00 AM to 12:00 noon

Customer Care numbers (Toll free) :

1800-209-7272

1800-103-7272

1800-233-7272

1800-3000-7272

Customer Care number (Standard rate apply) :

020-66026777

For online policy issuance / renewal :

1800-209-4040

FAX number

020-66026789