ULIP - Unit Linked Insurance Plan

Get Dual Benefits

ULIP plans offer market-linked returns⁸ along with the benefit of life cover.

Avoid the Hassle of Managing Funds

Once you pay your premiums, you can stop worrying about your investment, as our expert fund managers will manage the funds on your behalf.

Multiple Fund Options

With ULIP Plans, you can choose from multiple fund options and switch between the funds to ensure that your investment continues growing in the market.

Benefit from Withdrawal Options

After the lock-in period, you can make partial withdrawals on your ULIP policy and fulfil any financial commitments as needed.

Save Tax Up to Rs 46,800⁶

The premiums paid for ULIP plans are eligible for Section 80C tax deduction, and the payouts qualify for Section 10(10D) tax exemption, subject to the applicable tax⁷ laws.

Flexibility

ULIP Plans offer adequate flexibility to the policyholder, be it the fund options, fund allocation or policy tenure.

Transparency

You can find the NAV, charges, and fund performance regularly. You'll know where your funds are invested and how they're performing, so you can make better decisions.

Long-term Investment

ULIPs are designed to encourage long-term investment, help grow your wealth over time and benefit from the power of compounding. ULIPs also promote disciplined savings through a mandatory lock-in period.

Investment and Life Insurance Under One Plan

ULIPs Plans are known for the dual advantage of investment and insurance they offer under a single policy.  The life insurance cover will secure your family in your absence, and the investment option will help you create wealth for your future financial goals.

Fund Options Based on Risk Profile

With a ULIP policy, you can choose between equity, hybrid, and debt fund options based on your high, medium, or low risk profile. For example, young earners can choose a high-risk equity fund, whereas individuals close to retirement can choose a low-risk conservative debt fund.

Switch Between Fund Options

You can keep track of the performance of the ULIP funds based on the market movement and switch between them to enhance the potential gains.

ULIP Lock-in Period

ULIP investment plans have a mandatory lock-in period of 5 years. After the lock-in period, you can make partial withdrawals on your ULIP policy to meet any immediate financial needs.

Premium Allocation Charge

The premium allocation charge is a percentage of your premium that’s deducted before investing it in different funds under a ULIP.

Fund Management Charges

This charge is a percentage of the value of all assets, calculated mostly daily by adjusting the Net Asset Value of the fund. This charge is levied at an annual rate. It is divided by 365 and then multiplied by the number of days that have passed since the last unit valuation date.

Policy Administration Charges

This charge is a percentage of the Single / Annualised premium. It is calculated monthly at each anniversary by deducting the units starting from the date of the policy inception.

Mortality Charges

These are the charges levied for offering the life insurance risk cover to the policyholder during the policy tenure. These charges are levied for the entire policy term and are based on the policyholder’s age and the risk.

Surrender / Discontinuance Charges

If you choose to surrender your policy, then a charge will be levied on the fund value when the policy is discontinued or when the funds are withdrawn, whichever comes first.

Switch Charges

To ensure that you can manage and customise your own investments, some Tata AIA Life Insurance plans offer unlimited switches for each policy year, which is free of cost.

Premium Redirection Charges

Some ULIPs allow a maximum of 6 premium redirections or future premium allocations for each policy year, which are all free of charge. Premium redirections after this will attract a fee. Tata AIA Unit Linked Products like Fortune Pro, Fortune Maxima, Wealth Pro, Wealth Maxima, etc., do not have any premium redirection charge.

Partial Withdrawal

After the mandatory lock-in period of 5 years, you can make partial withdrawals from your ULIP each policy year. The number of free partial withdrawals allowed may vary for each product.

Analysis of Personal Investment Goals

Since each investor has different goals, it’s essential to analyse your personal goals and the time needed to achieve them. Then look for a ULIP investment plan that will align with these goals and fits your investment horizon.

Decide Insurance Objectives

ULIPs also offer the benefit of a life insurance cover that can be adjusted to meet your needs. If you have more financial liabilities and commitments, the life cover should also be adequate enough to protect your family.

Evaluate Risk Profile

Not every investor’s risk profile and risk appetite are the same. Therefore, when choosing a fund, risk-averse investors choose plans with low-risk funds, while aggressive investors opt for plans with high-risk funds.

Compare ULIP Plans

Since all ULIPs are usually different, you will need to compare the plans to understand which ULIP features, benefits, and funds are better suited for your investment goals.

Performance of ULIP Funds

ULIPs have funds whose performances are linked to the market. To ensure that you have suitable funds in your plan, check the fund performance of our Unit Linked Insurance Plans so that you can obtain the desired benefits from your investment.

Flexibility

ULIP plans should offer a flexible tenure as per your investment horizon as well as a good choice of funds so that you are not restricted to limited options that may not be aligned with your investment goals.

Understand Different Charges Levied

ULIPs carry certain charges, such as fund management expenses, premium allocation charges, etc., that can affect your investment value. Therefore, keep these ULIP charges in mind before you start investing in a ULIP.

Solvency Ratio

The insurance company that offers the ULIP policy should have a good solvency ratio. This term means that the company’s financial health is good, and you will be able to receive your ULIP returns and benefits as and when they are due.

Claim Settlement Ratio

Your insurer’s claim settlement ratio will also matter while choosing a Unit-Linked Insurance Plan. It indicates the number of claims they have settled against the number of claims they receive in a financial year.

Opt for Adequate Life Cover

While purchasing a ULIP scheme, ensure choosing an adequate life cover that will protect your family's financial future by helping them manage their routine lifestyle, clear off debts, etc.

Determine Affordable Premiums

Utilise our Tata AIA ULIP calculator to determine the most affordable premium to ensure you stay invested during the long term for increased benefits.

Know the ULIP charges

Make yourself aware of the ULIP charges and their impact on the returns to make wise investment decisions.

Do not Hide Crucial Information

As ULIP plans have a life cover component, be transparent about your medical history for adequate coverage and avoid hassles during claim settlement.

Do Not Miss Paying the Premiums

Ensure you make regular investments to avoid missing a premium payment that can affect your life cover and investment objectives. It can lead to a policy lapse that can affect the investment returns.

Having a Short-Term Investment Horizon

• Mistake: Expecting quick investment gains within 2-3 years.

• Why Avoid: ULIPs have a 5-year lock-in period and are designed for long-term wealth creation. Initial charges are generally higher but may reduce over time. Surrender charges may apply for exiting early.

• Correct Approach: Stay invested for the long term to benefit from compounding and lower charges.

Not Aligning with Your Risk Appetite

• Mistake: Choosing fund options based on popularity or advice, ignoring your risk profile.

• Why Avoid: Investing in funds that don’t align with your financial goals can lead to panic-driven decisions and potential losses.

• Correct Approach: Select funds as per your risk tolerance. Consider low-risk funds if you're risk-averse or close to your goals. Higher equity exposure may suit those with a long-term horizon and higher risk appetite.

Underestimating Charges

• Mistake: Not understanding the charges involved in a ULIP. 

• Why Avoid: ULIPs have various charges like premium allocation, policy administration, fund management, and mortality charges, which can affect returns, especially in the initial years of the policy term.

• Correct Approach: Compare products and choose ULIPs with lower or gradually reducing charges over time.

Falling for High Returns Assurity

• Mistake: Believing in unrealistic assurance of high returns.

• Why Avoid: ULIPs are market-linked; the returns depend on market performance and are not certain.

• Correct Approach: Have realistic expectations and understand that market fluctuations will impact returns.

Ignoring Tax Rules

• Mistake: Assuming the maturity amount is always tax-free without any conditions.

• Why Avoid: ⁷Tax benefits under Section 80C and 10(10D) apply, but certain conditions must be met.

• Correct Approach: If your annual premium exceeds 2.5 lakh, consult a tax advisor to understand the tax implications.

Not Reviewing Fund Performance

• Mistake: Not monitoring your fund performance and policy regularly.

• Why Avoid: Without review, you may remain invested in poorly performing funds.

• Correct Approach: Track fund performance regularly and switch funds or redirect premiums if needed.

Stop Paying Premium 

• Mistake: Stopping premium payments due to financial strain or dissatisfaction with returns.

• Why Avoid: Non-payment can lead to policy discontinuation, minimal returns, and loss of benefits until the lock-in period ends.

• Correct Approach: Choose a suitable policy and the premium amount you can afford throughout the policy term and stay committed.