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ULIP Plans - Boon or Bane

Recently, the market has been flooded by new generation ULIPs. Know the pros and cons of investing in a unit linked insurance plan. A Unit Linked Insurance Plan, or ULIP in their short form, are insurance policies which offer you the potential of life cover along with wealth creation. When you invest in a ULIP, a part of your premium is dedicated towards your life cover while the remainder is assigned to your chosen fund which can be a combination of equity, debt or hybrid fund. The returns of the investment depend on the performance of the fund chosen during the time of inception.

Benefits of ULIPs

Here are the key benefits of a ULIP scheme:

Life Cover - With ULIPs, you have the option to select the amount of life cover you desire. Under base ULIP schemes, the amount of life covered offered is ten times of your annual premium amount. Many ULIPs also offer as much as 40 times of your annual premium or even higher.

Investment Funds - ULIPs come with the freedom to select the investment funds. You can choose between equity, debt and a combination of both, called a balanced fund. Equity funds primarily invest in stocks of companies, debt funds invests in government securities and bonds. Balanced funds invest in both equity and debt portfolios.

Liquidity - New generation ULIPs offer liquidity in the form of partial withdrawal. Partial withdrawal allowed after first five policy years help you to withdraw a part of the invested money. Partial withdrawals can be utilised to take care of immediate expenses such as, your child’s 10th, 12th standard or graduation fees, going on a family vacation, in case of emergencies, etc. Also, partial withdrawals are free of cost.

Financial Goals - ULIPs are designed for long term investment. It can help you achieve your long-term financial goal. ULIPs can be utilised for wealth creation, retirement planning or saving for your child’s education.

Best 5 ULIPs to Invest

ICICI Pru Signature - This is a savings and protection oriented unit linked insurance plan which offers life cover to secure your family along with flexible investment options to help you achieve your financial goals.

ParameterDetails
Age at entry
Minimum entry age: 0 years
Maximum entry age: 60 years
Age at maturityFor policies other than Whole Life: Minimum maturity age: 18 years Maximum maturity age: 75 years For Whole Life option: Maturity age: 99 years
Death Benefit
Death Benefit = A or B or C whichever is highest where,
A = Sum Assured, including Top-up Sum Assured, if any
B = Minimum Death Benefit
C = Fund Value including the Top-up Fund Value, if any
Minimum Death Benefit will be 105% of the total premiums including Top-up premiums, if any received up to the date of death.
Maturity BenefitThe maturity benefit payable will be the Fund Value including the Top-up Fund Value, if any.
Wealth BoostersWealth boosters are added at the end of every 5th policy year starting from the end of 10th policy year till the end of your policy term. Each Wealth Booster will be equal to 3.25% of the average of the Fund Values including Top-up Fund Value, if any.
Partial Withdrawal BenefitYou can make unlimited number of partial withdrawals as long as the total amount of partial withdrawals in a year does not exceed 20% of the Fund Value in a policy year.

HDFC Life Click 2 Wealth - This is a unit linked, non-participating, life insurance plan that offers market linked returns along with provides valuable financial protection for you and your family.

ParametersInvest PlusPremium Waiver Option Golden Years Benefit Option
Age at EntryLife Assured: 0 years (30 days) to 60 yearsLife Assured: 0 years (30 days) to 60 years Proposer: 18 years to 65 yearsLife Assured: 0 years (30 days) to 60 years
Age at Maturity18 years to 75 years18 years to 75 years99 years
Maturity BenefitThe Fund Value is payable on maturity. The Fund Value will be calculated by multiplying balance units in your fund by the then prevailing unit price.
Death BenefitThe death benefit shall be: On Death of Life Assured - Highest of: - Total Sum Assured less an amount of Partial withdrawals made, if any, where Total Sum Assured is Basic Sum Assured plus any additional Sum Assured in respect of Top-ups. - Fund Value - 105% of Total Premiums paid
Rider Options
HDFC Life Income Benefit on Accidental Disability Rider - A benefit equal to 1% of Rider Sum Assured per month for the next 10 years, in case of an Accidental Total Permanent Disability.
HDFC Life Critical Illness Plus Rider - A lump sum benefit equal to the Rider Sum Assured shall be payable in case you are diagnosed with any of the 19 Critical Illnesses and survive for a period of 30 days following the diagnosis.

Bajaj Allianz Life Future Wealth Gain (Wealth Plus Variant) - This is a unit linked endowment life insurance plan which offers higher insurance cover along with periodic loyalty additions.

ParameterDetails
Minimum Age at Entry0 years
Maximum Age at Entry60 years If more than one rider is chosen under the policy, the maximum age at entry shall be restricted to 50 years.
Minimum Age at 18 years
Minimum Age at Maturity75 years
Maximum Age at Maturity
The death benefit payable will be, higher of:
a. Regular Premium Prevailing Sum Assured plus Top up Sum Assured, if any, or
b. Fund Value as on date of receipt of intimation of death
The death benefit is subject to the Guaranteed Death Benefit of 105% of the total premiums paid, till the date of death.
Death Benefit
  • Bajaj Allianz ULIP Accidental Death Benefit Rider
  • Bajaj Allianz ULIP Accidental Permanent Total/Partial Disability Benefit Rider
  • Bajaj Allianz ULIP Waiver of Premium Benefit Rider
  • Rider BenefitsThe insurer will allocate Loyalty Additions to the Regular Premium Fund Value as percentage of one Annualized Premium at the end of every 5 policy year starting from the 10th policy year.
    Fund BoostersFund Booster will be added to the Regular Premium Fund Value at maturity as mentioned below:
    Fund Booster (% of one Annualized Premium) for Policy TermPremium Payment Term
    5 Years7 Years10 Years15 Years
    10 Years5%7%10%NA
    15 Years & Above30%42%60%90%

    PNB MeTLife Mera Wealth Plan - This is an individual, unit-linked, life insurance plan which rewards you for staying invested with a life cover.

    12345678
    Entry Age
    Maximum (years):
    Single Pay - 60
    5 Pay - 54
    10 Pay - 60 for policy terms <= 25 years/55 for policy terms > 25 years
    Regular Pay - 60
    Minimum (years): 0 (30 days)
    Maturity Age
    Minimum: 18
    Maximum: 74 for 5 Pay and 80 for other Premium Payment Type options
    Death Benefit
    In case of death of the policyholder, the death benefit will be higher of:
    ● Fund Value
    ● The Basic Sum Assured less all Partial Withdrawals, made during two-year period immediately preceding the date of death of the Insured or
    ● 105% of total premiums paid excluding partial withdrawals made during two-year period immediately preceding the date of death of the Insured
    Where, Sum Assured = Multiple * Annualized Premium (or Single Premium, as applicable)
    Loyalty AdditionsThese additions will be allocated at the end of every policy year, starting from the end of the sixth policy year. The loyalty additions are defined as a percentage of average daily fund values for each fund during that same policy year.
    Maturity BenefitThe maturity benefit payable will be equal to total fund value as on the maturity date. You will have the option to receive the maturity benefit as a lump sum or as a structured payout through the Settlement Option.
    Partial WithdrawalsPartial withdrawals are available only after the completion of 5 policy anniversaries or on attainment of age 18 by the Life Assured, whichever is later.

    Max Life Online Savings Plan (Variant 1) - This is a unit linked non participating individual life insurance plan which offer life cover along with suitable returns.

    CriteriaSpecification
    Minimum Age at Entry 18 years
    Maximum Age of LifeVariant 1: 60 years Variant 2: 54 years
    Maximum Maturity Age Variant 1: 85 Years (Only for >= 10 Pay variants) 70 Years (Applicable for >= 5 Pay variants) Variant 2: 64 years
    Death Benefit
    Variant 1Variant 2
  • The death benefit payable will be:
  • Sum Assured equal to higher of Cover multiple times the Annualised Premium or 0.5 times the product of Policy Term and Annualised Premium
  • 105% of Total Premiums received upto the date of death, or
  • Total Fund Value

  • The death benefit payable will be:
  • A Lump Sum Benefit paid Immediately on the death of the Life Insured, it is 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 upto the date of death will be paid

  • 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

    How ULIPS are one of the best Tax-Saving instruments?

    You can save tax by investing in a ULIP. Here’s how

    1. Premiums paid towards a ULIP are eligible for tax deductions as per Section 80C of the Income Tax Act, 1961.

    2. Maturity and death benefit is tax free as per Section 10(10D) of the Income Tax Act, 1961.

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