Claim Settlement Ratio of 99.23%~


Know everything about Sum Assured in ULIP plans


Investment plans also act as tax-planning tools, as many avenues help reduce tax liability. There are different types of investment plans, and by choosing the right one, you can invest according to your needs and grow your savings.Read Less

Get in Touch to Know More
I agree and consent to the

Terms & Conditions, Privacy Policy

Get Your Life Goals, Done!

Tailored Life Insurance Solutions for your long-term Life Goals.

Written ByPalak Bagadia
AboutPalak Bagadia
LinkedIn Icon
Palak Bagadia, Associate – Digital Marketing at Bajaj Allianz Life, with experience spanning content and performance marketing, recruitment, employee engagement in the BFSI industry.
Reviewed ByRituraj Singh
AboutRituraj Singh
LinkedIn Icon
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: 7th July 2024
Modified on: 7th July 2024
Reading Time: 15 Mins

How does ULIP work?


The unit-linked insurance plan (ULIP) combines the best of both worlds: insurance and investment. A portion of your premium goes toward your life insurance coverage, while the remainder is invested in equities, bonds, and other market linked instruments. But how can you figure out how much money your family will receive if you die during the policy term or when the policy matures? So, let's try to make things as simple as possible for you!


What is the sum assured in ULIP?


In the event of a misfortune, the insurer will pay the sum assured to the policyholder's nominee. As an example, suppose you purchased a policy that promises to pay Rs 10 lakh to your nominee/s in the event of a disaster. The sum assured is the amount that has been pledged. It's worth noting that the premium amount and the sum assured are inextricably linked. The greater the sum assured, the higher the premium paid.

Let's say Mukesh buys a ULIP plan with a sum assured of Rs 10 lakh and a 20-year premium of Rs 50,000. Assume that Rs 25,000 of the premium is spent on insurance and the remaining Rs 25,000 is invested in the stock market. As per the terms and conditions of the policy, the following scenarios could be included in the policy:

  • Only if Mukesh died within 5 years of the policy's start date would the nominee/s get the money promised.
  • If Mukesh died between the ages of 5 and 10 years after the insurance began, the nominees would get the sum assured or the fund value, whichever is greater. The fund value is the return on the money invested in the capital market.
  • If Mukesh died after 10 years from the start of the policy, the nominees would get both the fund value and the money promised.
  • Mukesh would receive the entire fund value if the policy was to be matured, but not the sum assured.

Let's have a look at the various payout scenarios:

  • Situation 1: If Mukesh dies within the first five years of purchasing the ULIP plan, his nominees will receive the sum insured of Rs 10 lakh.
  • Situation 2: If he dies between the ages of five and ten, his nominees will get the sum assured or the fund value. Whichever amount is higher would determine the outcome. The nominees will receive the latter amount if the fund value is rupees nine lakh and the sum assured is rupees ten lakh. If the fund value, in this example Rs 12 lakh, is greater than the sum assured, the nominees will receive the former.
  • Situation 3: If he dies after 10 years, the nominee/s will get the fund value as well as the sum assured.
  • Situation 4: Mukesh would receive the entire fund value if he lives the maturity period. He would not, however, receive the sum assured in this case.

It's worth noting that the fund's value is determined by the percentage of premium you choose to invest in the market. In addition, the payout terms fluctuate depending on the type of policy. As a result, you should verify ahead of time to see if the ULIP plan matches your needs.


How is sum assured different from fund value in ULIP?


Term insurance plans and ULIPs are not the same thing. In the event of the policyholder's death, the nominee/s get a specified value as the sum assured in a term insurance policy. The final value in a ULIP can be made up of the sum assured, the fund amount, or both of them.


Wrapping Up


You can make an informed decision before purchasing a ULIP now that you know the various payment matrix. Use the ULIP calculator to figure out how much your sum insured will be. Additionally, one may invest in ULIP Plans to earn market-linked returns while protecting the future of your loved ones.


Life Insurance Guide -Ulip Related Articles

Tax on ULIP Maturity: What Is The Taxability of ULIP On Maturity?

When you plan your finances for the future, you may look for options that offer you multiple benefits under one roof. A Unit-Linked Insurance Plan or a ULIP may be one such product, offering the dual benefit

Read More
ULIP Riders Explained

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 which might deter your

Read More
Absolute Returns In ULIP Plans Explained

Protecting your family’s financial future and investing to ensure that your life goals are achievable are two of the key aspects that you will no doubt want to include in your financial plan. In other words

Read More
What Is ULIP? - Meaning, Full Form, And Benefits

Unit Linked Insurance Plan or ULIP is a type of Life Insurance policy, which offers you dual benefits of insurance and investment. ULIP offers you an opportunity for wealth creation along with the

Read More
View More
Plus Symbol
Minus Symbol

#Survey conducted by brand equity – Nielsen in March 2020

~Tax benefits as per prevailing Income tax laws shall apply. Please check with your tax consultant for eligibility.

**Past performance is not indicative of future performance.

The above information is for general understanding and is meant to educate the general public at large. The reader will have to verify the facts, law and content with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information.


*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

Terms & Conditions

I hereby authorize Bajaj Allianz Life Insurance Co. Ltd. to call me on the contact number made available by me on the website with a specific request to call back. I further declare that, irrespective of my contact number being registered on National Customer Preference Register (NCPR) or on National Do Not Call Registry (NDNC), any call made, SMS or WhatsApp sent in response to my request shall not be construed as an Unsolicited Commercial Communication even though the content of the call may be for the purposes of explaining various insurance products and services or solicitation and procurement of insurance business


Please refer to BALIC Privacy Policy


%%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

Ask for an Agent
Sign up for personal visit and tailored advice from our expert agents