ULIP means a "Unit Linked Insurance Plan". ULIPs are financial instruments which when used intelligently, gives you the best of both worlds. It combines the characteristics of a market linked instrument and life insurance policy. Part of the premium goes into buying life insurance cover while the remaining part of the premium is invested in an asset class (equity/debt), based on one's choice. Asset class investment is made after deduction of known charges.
Bajaj Allianz ULIP returns best among equity oriented plans - Review by Financial Express Read more ...
ULIPs have an in-built range of fund options to choose which range from aggressive funds (primarily invested in equities with the general aim of capital appreciation) to conservative funds (invested in cash, bonds, and money market instruments with the aim of capital preservation). You can decide to invest your money in line with your market outlook, time horizon, and your investment preferences and needs
When you buy a ULIP plan, you also select the funds that you want to invest in. Based on your preference, you also select a percentage that you want to invest in each fund. This is called Fund Apportionment. During the policy period, you may want to change these investment amounts based on how the markets are performing. This activity is called Fund Switching. These days, various ULIPs offer the options of life stage strategy which keep dynamically altering on its own without you having to monitor the funds.
ULIPs are good for savvy investors who actively manage their equity and debt investments.
|Holding Period||Equity Funds||Non-Equity Funds||ULIPs|
|Less than 1 year||15%||Tax rate applicable to investor||No tax on switching from one fund option to another.
Partial withdrawals (allowed after 5 years) and maturity corpus is tax-free.
|Over 1 year but less than 3 years||Nil|
|Over Three years||Nil||20% after indexation|
|Domestic equity funds and equity-oriented hybrid funds.||Includes all other funds (debt, liquid, MIPs, fund of funds, gold funds, global funds).||If life cover is 10 times the annual premium.|
While the low charges of new ULIPs make them attractive, the main advantage is the seamless and tax-efficient transfer from debt to equity, and vice versa. This switching may be for varied reasons, including rebalancing the portfolio or even timing the markets by savvy investors.
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Disclaimer: Insurance is the subject of the solicitation. For more details about risk factors, terms and conditions, please read the sales brochure carefully before concluding the sale. The terms and conditions of product/plan as contained in the Policy Document issued by the Company is available on the Web Site. Please note that the name of the Bajaj Allianz product/plan does not indicate the quality of the insurance contract and its future prospects or returns. Investment in ULIPs is subject to market risks associated with capital markets. IN ULIPs, THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER. Tax benefits are as per the prevailing Income Tax Laws including the Income Tax Act, 1961 and are subject to change from time to time. Service tax and education cess will have to be borne by the Policyholder as per applicable rates. All other charges shall be levied in accordance with the terms and conditions of the policy.