ULIP Plans : What are Unit Linked Insurance Plans?

• ULIPs can be aligned with your life goals
  ULIPs are one of the preferred investment tool to help you meet your long-term dreams and aspirations. You can opt for a ULIP plan based on your risk appetite, life circumstances, life goal and the time frame in which you want to achieve them.
• Dual benefit of investment and protection
  A ULIP plan provides the winning combination of wealth creation and protection. Life cover means that your family is able to pursue their life goals even in your absence. On the other hand your investment portfolio ensures that you are able to accumulate the required corpus for achieving your life goals.
• Flexibility to meet your unique requirements
  In a ULIP plan, you can choose between equity, debt or balanced funds or a combination of them depending on your risk appetite and the timeline of your life goals.
• Switch funds as per your requirement
  You have the freedom to switch between equity or debt funds available under the ULIP plan opted by you, based on market performance, your risk appetite and your financial goals to optimize your return.
• Lesser charges involved
  Charges in new-age ULIPs are spread over the tenure of the policy. Fund Management Charge (FMC) in ULIPs is capped at 1.35%, by the IRDA. Other charges like policy administration charge and premium allocation charge have reduced significantly over the years.
• Tax savings
  You can avail deductions up to `.1.5 lakhs against your taxable income for the premiums paid towards a ULIP plan, under Section 80C of the Income Tax Act, 1961. The maturity benefit and death benefit amount is also exempted from Income Tax under Section 10(10D) of the Income Tax Act, 1961, subject to fulfilment of specified conditions. Further, ULIPs are the only equity-linked investment product exempted from Long-Term Capital Gain Tax (LTCG). It also offers you hassle free and tax efficient switching from equity to debt and vice-versa.

A key advantage of choosing a ULIP is that you can customize it as per your unique financial goals. The following factors will help you zero in on the preferred ULIP:

• Go for a plan basis the past fund performance
  The primary reason for investment is to get the best possible return so that you can achieve your life goals and meet your financial commitments. So, before choosing a ULIP plan analyse its past fund performance. The past fund performance will give you an indication of the kind of returns you can expect from your investment, even though past performance is not indicative of future performance
• Opt for more fund options for better asset allocation
  Opt for a ULIP plan which offers a wide range of funds for asset allocation. A diverse portfolio of funds helps you in better allocation of your assets and also brings down your risk. 
• Less Charges = More Gain
  The new-age ULIPs with minimal charges will invest the maximum part of your assets, thus enhancing returns and helping you attain your financial goals.
• More premium payment options for convenience
  A ULIP plan usually comes as a single premium plan, limited premium plan or a regular premium plan. You can opt for one that suits your requirement and financial situation.  
• Opt for a plan with maximum free switches
  One of the significant benefits of a ULIP plan is the option of moving between debt or equity funds. Fund switching feature enables you to take advantage of market volatility by switching from one type of fund to another as per your needs and risk appetite. Go for a plan which allows a maximum number of free switches.

NAV or Net Asset Value of a ULIP is the value of each unit of the fund on any given day.
The formula used to calculate the NAV is as follows:
NAV = (Value of Current Assets + Market Value of Investments Held) – (Value of Current Liabilities & Provisions) / Total number of outstanding units on date

You can visit the website of your insurance provider and use NAV to determine the history of the fund performance and also to compare it with other funds.