ULIP - Unit Linked Insurance Plan

1.What is ULIP and How does ULIP Plan Work?

ULIP full form is Unit Linked Insurance Plans. It is a life insurance policy that combines insurance coverage with investment opportunities in market-linked funds like debt or equity. A portion of the premium is for life insurance, while the rest is invested based on your chosen funds. ULIPs may offer long-term investment growth, flexibility in fund selection, and a maturity benefit, but they come with charges and a lock-in period.

2.What are the different types of ULIP available in India?

In India, there are several ULIP options to suit a range of risk levels and financial objectives. While debt and cash fund ULIPs provide steady returns for clients who are risk averse, equity and balanced ULIPs concentrate on building wealth. With focused planning and portfolio diversification, child, retirement, and life-stage ULIPs assist in securing future needs.

3.What is ULIP plan NAV?

NAV in a ULIP represents the per-unit value of the fund, calculated by subtracting liabilities from the fund’s total assets and dividing by outstanding units. It helps investors monitor fund performance and determine the value of their investment. A ULIP offers both life insurance and  investment plan, with premiums allocated across market instruments.

4.When should I invest in ULIPs?

There is no specific time considered best for starting a ULIP. It’s important to align your investment with your financial goals, risk appetite, and expectations. Focus on long-term planning rather than market conditions.

5.What is the right time to invest in ULIPs?

Your investing horizon, risk tolerance, and financial objectives all influence when it's best to buy ULIPs. ULIPs are appropriate for people looking for a long-term combination of market-linked returns and insurance. Before investing, consider the fees, fund performance, and policy terms.

6.Do ULIP Plans have a lock-in period?

Yes, ULIP Plans have a lock-in period of 5 years, after which partial withdrawals are permissible.

7.Are ULIP Plans risky investments?

ULIP plans offer varied fund options to suit individual risk profiles. For example, you can choose between high-risk equity funds, low-risk debt funds, and medium-risk hybrid funds. Also, you can choose a different fund option based on the varying market cycles to minimise losses.

8.What are the eligibility criteria for purchasing a ULIP Policy?

The eligibility criteria vary for the individual options. You can check the respective product page for detailed information on the eligibility criteria.

9.Does a ULIP have life insurance coverage?

Yes, ULIPs offer a life insurance cover to your family. In case of your untimely demise during the policy term, your nominee will receive either the sum assured or the fund value as a death benefit, whichever is higher.

10.Can low-risk investors choose a ULIP?

Yes, there are ULIPs available for low-risk investors as well. You can choose the funds that you want to include in your portfolio and the fund allocation for these depending on your risk appetite.

11.Can I buy a ULIP plan online?

Yes, you can buy ULIP plans online on the Tata AIA Life Insurance official website. Before you purchase the unit linked insurance plan, you can also use the ULIP calculator to learn about the ULIP charges and the returns you can get from the plan.