A Unit Linked Insurance Plan, shortly and more popularly known as ULIP, is a combination offering both insurance and investment. Before going into the nitty-gritty of working of ULIP, it is first of all important to understand the benefits of the ULIP plan.

The benefits of the ULIP plan differs according to the ULIP plan selected, however, the general benefits of the ULIP are listed hereunder –

1. ULIP offers twin benefit of insurance + investment under one plan.

2. ULIP allows the policy holder to select investment options.

3. ULIP permits the policy holder to switch over the investment from one fund type to another.

4. Through ULIP investment, the policy holder can avail tax benefit under section 80C.

5. ULIP is an ideal investment for achieving the long-term financial goals.

Insurance Plans

Understanding allocation of insurance premium under ULIP

Under ULIP, the total insurance premium paid by the policy holder is divided into following two portions –

1. One portion of premium amount goes towards mortality charges i.e. insurance cover; and

2. Second portion of premium amount is invested. Interestingly, the policy holder is given the opportunity to select the investment pattern i.e. equity fund; debt fund or balanced fund. The three investment patterns are explained hereunder –

    • Equity Fund – Here the funds are invested in the equity market. The policy holder looking for higher return, by accepting higher risk attached with the fund, generally opt for the equity fund investment.
    • Debt Fund – Here the funds are invested in the debt instrument which carries lower risk and offer stable but lower returns.
    • Balanced Fund – Here the funds are invested in both equity market and debt instrument. Under balanced funds, the policy holder can expect average return with minimum risk.

It is very important for the policy holder to note here that the balance premium amount would be invested into the investment funds after deducting certain ULIP charges. The ULIP charges depends on the type of charge and policy terms, however, some of the ULIP charges deducted are listed hereunder –

  • Fund management charges;
  • Administration charges;
  • Switch charges;
  • Surrender charges;
  • Partial withdrawal charges;
  • Mortality charges;
  • Premium allocation charges etc.

Working of ULIP plan

As seen above, ULIP provides benefits of both insurance coverage and investment. It is important to understand how the investment pattern works under ULIP plan. Once the investment option is decided by the policy holder, the fund is invested accordingly.

Based on the invested amount, the policy holder is allocated number of units. The value of each unit is called Net Asset Value i.e. NAV. The NAV of the units differs from one ULIP to another based on the market conditions and fund performance.

Highlighting features of ULIP plan

1. ULIP offers both life insurance cover and market linked appreciation on investment.

2. Importantly, the policy holder is allowed to switch the existing investment fund to another fund type.

3. The amount of insurance premium paid under ULIP is allowed as deduction under section 80C of the Income Tax Act.

4. The policy holder is facilitated with partial withdrawal under ULIP.

Best ULIP plan

After going through the above write-ups, one can easily acquire basic knowledge of ULIP, however, it is important to figure out the best ULIP plan available in the market. Max Life Insurance ULIP plan stands out to be the best. Following two types of ULIP plan are being offered by Max Life Insurance –

1. Online Savings Plan for Wealth creation

Max Life Online Savings plan provides the dual benefit of lumpsum payout for your goal along with protection from life’s uncertainties. It also gives the flexibility to choose from a wide range of funds to suit your investment style and choice of the policy term. What’s more! with this plan, you can save taxes on your investments too. Since as we all know that each one of us dreams of a better future. A future that brings smiles to the faces of our loved ones. Fortunately, such smiles can become a reality with a little planning and disciplined investments. Here is a plan that helps you invest systematically thereby creating wealth to fulfill your dreams.

2. Online Savings Plan for your Child

Max Life’s Online Savings Plan is an online non-participating Unit Linked Insurance Plan (ULIP) that offers a perfect combination of life insurance protection for your family as well as investment. This plan provides a lumpsum payout payable immediately on death, followed by regular payouts in the form of Family Income Benefit and the total Fund Value at the end of the Policy Term. In addition, all outstanding premiums after the date of death of the Life Insured will be funded by the Company. As we all know that every parent’s dream is to ensure their child gets the best of everything. As parents, you are worried about every little need of your child, but education and marriage are the biggest concerns where you do not want to compromise on anything. Here is a plan that will help you invest your hard-earned money wisely plus insure your child’s dream are intact, even in your absence.

Salient features of both the ULIP plan

  • Under both the plans, the policy holder is offered following wide funding options for investment –
    • High Growth Fund – It is an open-ended equity multicap fund focusing on midcaps.
    • Growth Super Fund – It is an open-ended equity fund focusing on large caps.
    • Growth Fund – It is an open-ended hybrid fund with equity portion focused on large caps.
    • Balanced Fund – It is an open-ended hybrid fund investing in both equity and debt instruments.
    • Conservative Fund – It is an open-ended hybrid fund investing mostly in debt instruments.
    • Secure Fund – It is an open-ended debt fund which invests across duration.
    • Secure Plus Fund – It is an open-ended debt fund which invests across duration.
  • Tabulating hereunder individual features of both the ULIP plan
Online Savings Plan for Wealth creation Online Savings Plan for your Child
As a maturity benefits, you will be eligible to receive an amount, provided settlement option has not been exercised, equal to the Fund Value, where the Fund Value will be calculated as:

Fund Value = Summation of Number of Units in Fund(s) multiplied by the respective NAV of the Fund(s) as on the date of maturity.

As a maturity benefits, you will be eligible to receive an amount, provided settlement option has not been exercised, equal to the Fund Value, where the Fund Value will be calculated as:

Fund Value = Summation of Number of Units in Fund(s) multiplied by the respective NAV of the Fund(s) as on the date of maturity.

As a death benefit, the nominee shall get highest of the following benefits:

  • Sum Assured equal to higher of Cover multiple times the Annualised Premium or 0.5 times the product of Policy Term and Annualised Premium (reduced by applicable partial withdrawals, if any), or
  • 105% of Total Premiums received up to the date of death, or
  • Total Fund Value (as on the date of death)

The Policy Terminates on the death of Life Insured.

Please note that the ‘applicable partial withdrawals’ mentioned above refers to all the partial withdrawals made during the two years period immediately preceding the death of the Life Insured.

On death of the Life Insured anytime during the term of the policy, the policy shall continue till the end of the Policy Term and the nominee shall get the following benefits:

  • Lump Sum Benefit:

Immediately on death of the Life Insured, highest of Sum Assured (equal to higher of 10 times the Annualised Premium or 0.5 times the product of Policy Term and Annualised Premium), or 105% of Total Premiums received up to the date of death will be paid.

  • Family Income Benefit:

A Family Income Benefit equal to 1% of the Sum Assured will be paid each month starting from the Policy anniversary date of every month following or coinciding with the date of death of the Life Insured till the end of the Policy Term, subject to a minimum of 36 monthly payments and a maximum of 120 monthly payments. Please note in case of death of Life Insured with less than 36 months left till the end of Policy Term, there will be a Lump Sum payment of remaining instalments (36 less monthly instalments already paid) with the last monthly payout at end of the Policy Term.

  • Funding of Premium:

Under this benefit, the Company will fund all future outstanding premiums as and when due under the Policy.

  • Fund Value shall be paid as on the date of maturity.
You may be entitled to certain tax deductions on your premiums and on proceeds under the policy benefits. Please note that all such tax deductions are subject to tax laws prevailing at the time of payment of premium or receipt of benefits. Tax benefit on the premiums paid are exempt under Section 80C of the Income Tax Act, 1961. Tax benefits are on the payout received at the time of maturity and the life cover amount received at the time of the death of policyholder.
There is no allocation charges and not even a single rupee of administration charge. Complete flexibility with option to choose a Premium Payment Term and Policy Term. The policy premium term cannot exceed the policy term.
Choice of 5 different funds to invest. Alternatively, invest through the dynamic investment strategy, where the company maintains a balance between equity and debt to suit your risk appetite There is no premium allocation and policy administration charge under this product. There will be only Mortality and Fund Management Charge.
The plan offers best of both world i.e. protection and returns. You get life insurance cover and superior returns on your money through systematic investments in equity and debt funds. No Partial withdrawals are allowed in the first five policy years and thereafter a maximum of two partial withdrawals are allowed in any policy year. The minimum amount of partial withdrawal allowed per transaction is Rs 5,000.
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