1. Life Insurance Guide /
  2. ULIP /
  3. ULIP charges

A Guide to ULIP charges to invest better in them

Dec 04, 2018

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 Rs. 6,000. This is followed by Rs. 5,000, Rs. 4,000 and Rs. 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.

Popular Articles

Featured Articles

4 Tips On How To Retire Early

Over the course of your working life, you have varying needs and goals. As you cross different milestones, these needs change accordingly. At times, necessities such as paying for your children's higher education or their weddings might...Read more...

Know How To Begin Retirement Planning Early

No matter at what stage of life you are in, and what life goal you are pursuing, retirement planning should be a part of your investment journey. Even though in the scheme of things...Read more...

4 Ways You Can Spend Your Annual Bonus - Know How To Invest Money

For most of the salaried professionals, this time of the year brings in much joy and a sense of achievement. You get your annual bonus besides your usual monthly salary - just like the icing on top of a cake....Read more...

6 Reasons To Begin Early Retirement Planning in Your 20s

Millennials are increasingly seeking to pursue valuable investment options to accomplish life goals. However, in the constant pursuit of short-term goals, they barely...Read more...

ULIP Funds - Understand The Fund Switching Option

ULIP Funds Switching - Know How It Works

Unit Linked Insurance Plans (ULIPs) come with the dynamic option of Fund Switching, which provides the much-needed flexibility to this investment product....Read more...

3 ways in which ULIPs help you save tax

ULIP Tax Benefits - Know 3 Ways In Which ULIPs Help You Save Tax

If you are reading this, the chances are that you are exploring ways to reduce your income tax liability and also make some smart investments that help you create wealth...Read more...

Why Return of Mortality Charge (RoMC) is a Revolutionary Idea

Why Return of Mortality Charge (RoMC) is a Revolutionary Idea

Over the last few years, keeping in mind the customer's feedback and needs, the regulator and the life insurance industry have helped ULIPs evolve considerably to provide...Read more...

RoMC - The Key To Long-Term Investing

RoMC - The Key To Long-Term Investing

Investing in a disciplined way over an extended period of time has many benefits. First, it helps you tide over the market volatility. Second, when you give time to...Read more...

Know How RoMC Enhances Your ULIP Investments

Know How RoMC Enhances Your ULIP Investments

Unit Linked Insurance Plans (ULIPs) have emerged as a befitting investment vehicle, post the many significant regulatory reforms introduced between 2010 and 2013...Read more...

Your Guide to ULIP Insurance Riders

Your Guide to ULIP Insurance Riders

A Unit-linked Insurance Plan (ULIP) is designed and structured in a way that takes care of both your life insurance and investment needs. Yet, there might be some unforeseen circumstances in life...Read more...

Why You Should Remain Invested For The Full Tenure In ULIPs

Why You Should Remain Invested For The Full Tenure In ULIPs

There's a popular refrain in the financial circles, Don't try to time the market, instead give your investments enough time to grow. This is more so in the case of investments in equities..Read more...

Term Insurance : Insurance That Costs Less Than Your Daily Chai

Term Insurance : Insurance That Costs Less Than Your Daily Chai

Paul Stanley once said "Youth is incredible because you really do feel invincible." Since young professionals feel nothing can go wrong at their age, they tend not to plan for their future...Read more...

Term Insurance Benefits and Things To Consider Before Buying a Term Insurance Plan

Term Insurance Benefits and Things To Consider Before Buying a Term Insurance Plan

Safety is an important consideration for all of us. For instance, when we are driving, we make sure that we have our seatbelts on for our safety.Read more...

Term Life Insurance Policy Riders: Why They Matter

Term Life Insurance Policy Riders: Why They Matter

The Oxford English Dictionary defines a rider as "A condition or proviso added to something already agreed". When added to your life insurance policy, riders can be an effective and powerful addition..Read more...

Why Term Insurance Is important for Working Couples

Why Term Insurance Is important for Working Couples

Power couples are on the rise. We see more families where both partners are choosing to climb the corporate ladder. It's a myth that life insurance.Read more...

8 Questions You Should Ask Yourself Before Buying a Term Insurance Plan

8 Questions You Should Ask Yourself Before Buying a Term Insurance Plan

Term insurance is the purest form of insurance where for a fixed premium, you cover yourself against any unforeseen contingencies...Read more...

How to Choose the Best Critical Illness Cover for Yourself

How to Choose the Best Critical Illness Cover for Yourself

With increasing incidences of critical illnesses, such as heart ailments, insurance policies covering such diseases are a must-have in your insurance portfolio,... Read more...

Know 4 Different Types of Health Insurance Plans

Know 4 Different Types of Health Insurance Plans

Healthcare expenses can be the biggest drag on your finances. With lack of quality public healthcare system,... Read more...

Compare an ordinary Health Insurance Plan and a Critical Illness Cover

Compare an ordinary Health Insurance Plan and a Critical Illness Cover

Many of us are confused about the difference between a traditional health insurance plan and a critical illness cover.. Read more...

Handle NCDs with the help of a Critical Illness Cover

Handle NCDs with the help of a Critical Illness Cover

Cast a cursory glance around and the chances are some of your friends or acquaintances are battling serious illnesses...Read more...

Critical Illness Cover Policy or Rider Benefit: What makes more sense?

Critical Illness Cover Policy or Rider Benefit: What makes more sense?

Sometimes we have to handle a few hurdles in our road to realizing our life goals. Usually, these hurdles arrive when we least expect them... Read more...

A Guide to ULIP charges to invest better in them

A Guide to ULIP charges to invest better in them

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... Read more...

What are different types of ULIP funds?

What are different types of ULIP funds?

Unit Linked Insurance Plans (ULIPs) provide the dual benefit of insurance cover and wealth creation to its investors. Which means policyholders get life cover along with..Read more...

How To Save Income Tax By Investing In Term Life Insurance Plan

How To Save Income Tax By Investing In Term Life Insurance Plan

Every year, around the end of the financial year, we tend to seek out financial instruments which help us in tax planning and savings. Of these, buying a life insurance... Read more...

Why terms plan in life insurance is important for single women

Why terms plan in life insurance is important for single women

A ladies handbag is her "Armageddon Resource Centre", carrying everything ranging from tissues to snacks, from coins to a Swiss army knife, and from makeup to pepper spray. Naturally, because women..Read more...

Term-plan

Term Insurance: How Much Should You Be Insured For And For How Long?

Term insurance plan is affordable and offers not just tax benefits, but also peace of mind that your loved ones will continue to achieve..Read more...

Tips To Invest In Ulips

4 ULIP investment tips one should never forget

Picking the best restaurant or cafe is a much easier task today, thanks to the internet! All that you need to do is, check out the online reviews, ambience,photographs and of course.. Read more...

Recommendations On Ulip vs - Equity Investment

3 reasons why ULIP plans are one of the preferred choice for equity investments

Inflation is the biggest factor you need to watch out for while investing. This is because inflation eats into your savings over a period of time..Read more...

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...

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...

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...

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
    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...