About Unit Link Policy Insurance
The Unit Linked Insurance policy is a combination of insurance and investment. It is a life insurance product that offers risk cover to the insured along with an investment option. The insured person can use part of the premium towards investment in various equity and debt schemes. As this is an integrated plan, the ratio of protection and investment can be managed based on the specific choices and needs. The benefit is subject is risk associated with the investment. So, while considering the ULIP, you should also consider the future uses of the insurance benefit amount.
Benefits of Unit Link Insurance
- The plan allows earning market-linked returns.
- ULIP serves dual purpose – insurance coverage and investment.
- There is a death benefit during the policy term.
- The plan has maturity benefits if the policyholder endures the maturity period of the plan.
- Along with insurance and investment, the plan gives tax benefits also.
- If you are seeking a favorable benefit, a long-term investment plan should be considered.
- The plan also allows part withdrawal of the amount.
How does Unit Linked Insurance Policy work?
A part of the premium collected via ULIP is used as an investment. The insured person decides beforehand which plan to select – a low risk or high risk, percentage of premium to be invested, a period of investment, benefit amount, etc. Based on the decided norms, the insurance company will invest the part of the premium in various securities. At the same time, insurance also gives life coverage to the investor. Similar, to mutual funds, the policyholders are allotted units and each unit has a net asset value (NAV) that is declared on a daily basis. The NAV is the value based on which the net rate of returns on the policy is determined. The NAV varies from one ULIP to another based on market conditions and fund’s performance.
