What Is ULIP?

Unit linked policies are insurance investment plans that offer the policy holder to have insurance cover with reasonably good returns in a long term. ULIPS are recently introduced in insurance sector after considering the boom in the share market. These gave good returns upto 54% on the investment. The expected return in the normal market condition is around 26 to 45%. ULIPS are most sold life insurance products in the recent past due to their flexibility of operation and investment options and good returns from them.

Unlike traditional and conventional insurance products, there is less chance for lapse of policy even the premium is unpaid. The risk of investment in the ULIPS is hold by the policyholder. Most insurance companies offer you different investment options in equity, bonds and securities with different risk level. Taking Higher risk is always associated with expecting good returns. Investment in the bond fund is associated with study returns at 11% with less risk. The premium has to be paid for minimum 3 years. There is lock in period for 3 years during which policy holder is not allowed to either partially withdraw from the policy or fully withdraw the amount. Lock in period is preffered because in the early years there will be more allocation and policy administration charges. So the fund need atleast 3 years to give good returns. The amount is paid after considering the present NAV (Net Asset worth) of the plan. After 3 years lock in period ULIPS are same like your bank account, You can either partially withdraw money or terminate the policy without any extra charges involved.