ULIPs
Presented by
Ajesh Mohan
Intro to ULIP
• Insurance – protection of the economic value
of assets
• Needed to reduce the impact of risks on that
asset
• The co is called insurer, and person – insured
• Insurance two types- life and non-life
• Even intangibles can be insured
Some terms
• Premium
• Sum assured
• Term
• Maturity
• Claim- Maturity benefits and Death benefits
• Surrender value
• Lapse
Traditional and New age Insurance
• In traditional, all premiums go into a common
fund which is invested at insurer’s discretion
• No transparency in terms of charges and
invested amount and lower return
• Modern insurance is against all of this
• Premiums invested in capital mkt at holder’s
discretion and complete transparency in
charges and invested amount and category
What is ULIP?
• Unit Linked Insurance Policy
• A life insurance policy which provides a
combination of risk cover and investment
• A part of the premium for insurance cover
and other charges, balance to capital market
• Sum invested in cap mkt is Unit Fund
• Value of Unit Fund on a given day is its NAV
Types of funds
• Determined by the risk and return involvd
[Link]
[Link]
[Link]
[Link] funds
Types of ULIP plans
• Type I plan - pays the higher of the sum
assured and fund value to the nominees upon
the death of life assured
• Type II plan - both the sum assured and fund
value are paid
• Type II is better but expensive
Charges in ULIP
• Premium Allocation Charge
• Mortality Charges
• Fund Management Fees
• Policy administration Charges
• Surrender Charges
• Fund Switching Charge
• Service Tax Deductions
Advantages of ULIPs
• Covers 2 requirements - insurance n investment
• Freedom to choose where to invest funds
• We can choose to increase our premium
payments (top up facility)
• Switching option is available
• Tax benefits upto Rs 1,00,000(sec 80c)
• Riders can be attached to the main policy to
provide you added protection
• Cover continuance option available
Limitations
• More expensive than other kinds of insurance
products
• Heavy allocation charges and other
administrative charges will make the amount
available for investment significantly restricted.
• Not an attractive investment in the short term
(longer break-even time )
• Good knowledge of the financial markets needed
to maximize returns from ULIP by switching
between funds at appropriate times.
ULIPs vs MFs
• Similar in terms of their structure and functioning
• Investors are allotted units and NAV is declared for the
same on a daily basis
• Many variety of funds available in both
• But different in ways like
1. No life cover in MF
2. Flexibility of premium amount in ULIP
3. Expenses in MF has an upper limit (set by SEBI)
4. Tax exemptn(80c) on all ULIPs while in MF, its only for
invstmt in tax - saving funds
5. Switching free in ULIP, but exit load in MF
6. MF more beneficial in short term investments
Thank You
• Aviva - Sachin Century
• Bajaj Allianz - Life Long Gain
• Bharti AXA Life – AspireLife
• Birla Sun Life Saral Jeevan Plan
• Canara HSBC Oriental Bank of Commerce Life Stay Smart Plan
• HDFC Standard - Unit Linked Wealth Maximiser Plus
• ICICI Pru Smart Kid Maxima
• ING Vysya Life - One Life
• Kotak Long Life Wealth Plus
• LIC Jeevan Saathi
• Max New York - Life SMART Xpress
• Reliance Wealth + Health Plan
• SBI Life - MAHA ANAND II
• Tata AIG Life InvestAssure Sampatti