What is Unit Link Insurance Plan?

What is Unit Link Insurance Plan?
Unit link insurance Pan (ULIP) is a policy in which premium paid are invested as per the choice of policy holder either in debt or equity product or in combination of both. Unit link insurance plan has both the benefit of insurance as well as choice to choose the return on investment. ULIP's have the flexibility of choosing premium amount and the choice of funds in which money to be invested. At present all Insurance companies have 4-5 Unit link insurance plan.

In case of untimely death of the policy holder his nominee would get either the sum assured or the value of units whichever is higher.

Unit link insurance policy which is also known as "ULIP" is one of the most popular insurance plan today because of following benefits:

  • Flexibility to choose premium amount. It can be single, regular or variable.
  • Various choices of funds in which in which money to be invested.
  • A good combination of Both investment and Insurance.
  • It has liquidity. As per the terms of policy, money invested in ULIP's can be withdrawn in case of need and urgency of funds. Normally ULIP's has 3 years lock-in period. The amount can be withdrawn in units.
  • Choice of returns. Since premiums are invested in equity related market or debt market. So a policy holder who want high returns can opt investment in equity and the person who don't like risks of equity market can opt for debt funds.
  • Tax benefit. Proceeds from investment in ULIP get tax rebate under section 88 (in India) whereas proceeds from investment in mutual funds attract capital gain tax.
Since ULIP are designed according to different needs so one can check and compare which ULIP is most suitable for him. It is also advisable to check latest NAV of ULIP plans, its performance and invest accordingly. So if you want to create wealth and also want insurance protection then go for Unit Link Insurance Plan.

Read othe posts:
Why Life Insurance? >
List of Life Insurance Companies in India >
Calculate Life Insurance Premium Online >

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