ULIP Plans: Buy Best Unit Linked Insurance Plans Online 2024

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What is a ULIP (Unit Linked Insurance Plan)?

The meaning of ULIP is quite simple: it is a market-linked plan wherein one can avail life insurance coverage and also invest in different funds. Similar to other types of life insurance, you are required to pay premiums for your ULIP. This ULIP premium may be invested in funds of your choice and also be directed towards building the life cover. When your plan matures, you get the fund value consisting of the amount you invested along with the returns you earned on it. In case of your unfortunate demise, your nominee may receive the death benefits of the plan.

How ULIP Works?

Here's how it works in detail:

The premium you pay is used to meet two key financial goals, life insurance and investment.
Your money is invested in market-linked funds that you get to choose. The total amount invested may be divided into units, with each having a specific face value.
The value of each unit is referred to as the NAV. It can reflect any increase or decrease in the value of the underlying assets.
If you make partial withdrawals from the accumulated corpus, the corresponding number of units are sold.
At the time of maturity, you may receive the total fund value .
In case of your demise within the policy tenure, your nominee can receive the death benefit which may be the sum assured amount or the total fund value of the plan, basis the type of plan.

Steps for Buying A ULIP Online

After knowing the benefits of ULIP, you may consider buying one online through a straightforward process. Follow these steps to acquire a ULIP-based product online seamlessly:

Go to the official website of the insurer offering ULIP products.
Browse through the available ULIP products and select the one aligning with your financial goals and risk appetite.
Determine the desired policy duration and select the premium payment amount suiting your budget and financial objectives.
Once you have made your selection, proceed to the payment section of the website.
Choose your preferred modes of payment, such as net banking, credit card, debit card, or online wallet.
Make the payment using your selected payment method and confirm the purchase.
After the successful payment, you may enjoy the advantages and benefits of your newly acquired Unit Linked Insurance Plan.

By following these steps, you may conveniently purchase a ULIP online, saving time and ensuring a hassle-free experience. You can also use a ULIP calculator to get an estimate of your investment needs.

How to Choose A ULIP?

Understanding what a ULIP is may drive you to invest in one. There are different types of ULIP plans options you may choose from based on your needs and financial goals. Here are some suggestions that can help narrow your choices:

Analyse your personal goals

Before choosing a plan, it may be essential for every investor to analyse their personal goals. You can invest in ULIPs keeping your personal goal in mind, like buying a house or planning for retirement.

Align your plan with your investment goals

Before buying a ULIP policy, keep your investment goals clearly defined. For example, if you want to have a major stake in high-risk investments, you can think of investing in equity ULIPs.

Compare ULIPs

You may compare the different features and advantages offered by each ULIP to determine the one that suits your specific needs. This may help you get the optimum maturity or death benefits.

Take Advantage of ULIP Flexibility

ULIPs may offer investors a range of investment options and tenures to choose from depending on their risk appetite and financial goals. You may choose the suitable funds and tenure accordingly.

Analyse Features and Benefits of ULIPs

Every ULIP has unique features and benefits. Having a proper understanding of their pros and cons and comparing their features may help you select a ULIP plan of your choice.

Check the Solvency Ratio

An insurance company’s solvency ratio may showcase whether it may be able to honour its claims in the future or not. An insurance company must have a solvency ratio of at least 150% as mandated by IRDAI.

Check the Claim Settlement Ratio (CSR)

The percentage of the total death related claims settled against the death claims received by an insurance company in a financial year is termed as CSR. A high CSR may indicate the insurer's reliability in settling claims.

Pick an Investment Strategy

Some ULIP plans have a focused goal that serves particular needs of the investors. For instance, a ULIP for retirement may focus on creating wealth for post-retirement needs. Going with a particular investment strategy may help investors generate regular income and fund future goals.

Benefits of ULIP

A ULIP may offer a host of benefits that go beyond traditional insurance or investment plans. They may include:

Maturity Benefit: Unlocking Your Accumulated Fund Value

Upon reaching the maturity of your ULIP plan, a rewarding benefit may await. You may become eligible to receive an amount equal to the accumulated fund value, serving as a maturity or survival benefit. This may ensure your investment grows over time and rewards your commitment. In case you pass away unfortunately, the maturity benefit may be passed down to your beneficiaries. Depending on the policy, they may receive either the sum assured or the fund value, depending upon the type of ULIP.

Death Benefit: Protection for Your Loved Ones

In the unfortunate event of an untimely demise during the ULIP policy tenure, your family may receive the ULIP death benefit. This financial support, paid out according to the policy's terms and conditions, may ensure that your loved ones are safeguarded in challenging times. It may also be noted that, regardless of the changes in the investment amount and fund structure, the death benefit stays unaffected. It may be considered as the base of any life insurance plan and likely stays fixed through the tenure.

Asset Allocation: Empowering You with Choice

Unit Linked Insurance Plans can provide a unique advantage through asset allocation. This strategy may allow you to allocate your capital across different ULIP funds offered under your policy. By investing in equity funds, debt funds, or a balanced mix of the two, you may align your investments with your risk appetite, market ups and downs, and financial goals. This flexibility may empower you to navigate the market and potentially optimise your returns.

Wealth Generation: Harnessing Market-Linked Growth

A ULIP investment may offer the potential for market-linked wealth generation over the longer term. Short-term market volatility may exist. However, if one looks at it historically, investment in market-linked funds may have favourable performance if one holds it over extended periods. By harnessing this growth potential, ULIPs may contribute to building wealth and achieving your long-term financial aspirations.

Tax Benefits^[1]

ULIPs not only provide you with the opportunity to grow your wealth and protect your loved ones but may also offer significant tax advantages. Here are several ULIP tax benefits:

Stage 1: Entry Benefits - Avail Deductions on Premiums

The premiums you pay towards your ULIP may be eligible for deduction from your taxable income, as per Section 80C of the Income Tax Act, 1961. You may claim a deduction of up to Rs.1.5 lakhs, subject to the provisions mentioned in the Act.

Stage 2: Earnings Benefits - Tax-Free Growth

As your ULIP investments appreciate over time, the earnings or gains may not be taxable as long as you keep the funds invested. This means you may enjoy tax-free growth on your ULIP investments until you decide to withdraw or redeem them.

Stage 3: Exit Advantage - Tax Treatment at Maturity and Demise

The death benefit amount your nominee may receive may be tax-free as per Section 10(10D) of the Income Tax Act, 1961. For you to get tax exemption on maturity, the premium of the ULIP purchased after 1st April 2012 should not exceed 10% of the death sum assured. If the ULIP is purchased before 1st April 2012, the premium should not exceed 20% of the sum assured. Also, as per the 2021 budget, if the total aggregate annual premiums of ULIP purchased on or after 1st February 2021 is above Rs 2.5 lakhs, the maturity proceeds cannot be tax-exempted. Any returns you may receive from equity funds above Rs 1 lakh may be taxable as per the Long-Term Capital Gains (LTCG) tax rate of 10%. In the case of non-equity assets, returns above Rs 1 lakh may be taxed at a 20% rate.

Why Monitoring Your ULIP Fund Performance is Crucial?

Keeping a close watch on the performance may be vital to regularly monitor and evaluate the performance of your ULIP funds. It may also be essential for the following reasons:

Managing Risks

With a ULIP plan, you have to bear market-related risks associated with your investments. Monitoring the performance of your ULIP funds may enable you to gauge whether the risks may be within your tolerance levels. By being well-aware, you may make informed decisions to mitigate potential risks.

Switching Funds

ULIPs may provide the flexibility to switch between different funds based on changing market conditions and your evolving life goals. By actively monitoring your ULIP performance, you can gain insights into when it might be appropriate to switch funds. This may empower you to align your investment strategy with your financial objectives effectively.

Achieving Long-term Goals

Regularly assessing your ULIP performance allows you to track your progress toward your long-term financial goals. By ensuring that your investment remains on track, you may avoid falling behind in achieving your life goals. If there may be any discrepancy with the fund and your goals, you may want to take some steps to align them again.

Checking Fund Performance

If you have invested in a ULIP plan from Bajaj Allianz Life Insurance Company, you can check your ULIP fund performance on our website. This may help you get a clearer idea of where your funds may be going and what you may do to improve them if needed.

ULIP Charges

Familiarising yourself with the ULIP charges levied to cover expenses and risks may be crucial. It may give you a better understanding of when and why they are levied, enabling you to make an informed decision. Here is a list of major ULIP charges:

Charge Type	Description
Fund Management Charges	The money you invest in a ULIP is managed by expert fund managers. These professionals can make investment decisions, monitor assets, and may aim to optimise returns. Hence, a fund management charge may be levied by the insurer to provide for this expertise.
Policy Administration Charges	Managing ULIPs involves administrative tasks like paperwork and record keeping. To cover these expenses, insurance providers may deduct policy administration charges from your policy account.
Mortality Charges	ULIPs include a life insurance component, providing a death benefit to the nominee in case of the insured person’s demise during the policy term. To account for this risk, insurance providers may levy mortality charges on ULIP. Some new-age ULIPs, including those offered by Bajaj Allianz Life, feature the Return of Mortality Charges (ROMC) benefit. If the policyholder survives the policy term, the initially levied mortality charges may be returned at maturity, reducing the overall cost of investment.
Premium Allocation Charges	These charges may be deducted upfront as a percentage of the premium. Premium allocation charges may account for the initial expenses incurred by the insurance company when issuing the ULIP, such as underwriting expenses and distributor fees.
Policy Discontinuance Charges	ULIPs typically have a lock-in period of five years. If you decide to surrender your ULIP before this period and discontinue premium payments, the insurance provider may levy policy discontinuance charges. The charges may depend on the year in which you stop paying the premium.
Partial Withdrawal Charges	After the completion of the 5-year lock-in period, ULIPs can allow for partial withdrawals. While some plans may offer unlimited free partial withdrawals, others may have a limit. If you may exceed the permitted number of free withdrawals, additional ULIP charges may be applicable.
Fund Switching Charges	One of the unique features of ULIPs may be the ability to switch your investment partially or completely between funds. This flexibility may allow you to align your portfolio with changing market cycles and risk tolerance. While some insurers may not charge for fund switches, others offer a specified number of free switches per year. If you exceed this limit, you may be subject to fund switching charges based on the policy’s terms and conditions.
Miscellaneous Charges	Under this category, you may encounter additional charges for making changes to your ULIP contract, such as adjusting the premium payment mode. These miscellaneous charges may vary based on the specific alterations you make.

What is NAV in ULIP?

A ULIP NAV is the daily calculated value of units held in a ULIP fund. It may represent the market worth of the units and may help investors track the performance of their investments. By monitoring the ULIP NAV, investors may make informed decisions about their investment strategies. NAV is calculated by dividing the total net assets of the fund by the total number of units outstanding. This formula can help determine the value of each unit in the ULIP fund.