Unit-Linked Insurance Plans (ULIPs)
Lastly, we will understand a unique type of life insurance that combines the benefits of insurance and investment in a single plan known as 'Unit Linked Insurance Plan' (ULIP).
Market Linked Plans - Unit Linked Insurance Plans (ULIPs)
Unit Linked Insurance Policies (ULIPs) are a combination of investment and protection and allow you the flexibility and choice on how your premiums are invested. Herein, the policyholder pays premiums of which a part of the money is invested in markets (this depends on funds chosen) and another part covers mortality charges for providing the life insurance cover. ULIPs therefore combine insurance protection with investments.
Medical underwriting (medical tests) is not necessary to buy a ULIP policy unlike traditional plans. Typically, sum assured = 10 times of the premium paid.
The policy provides you with a choice of funds in which you can invest. You also have the flexibility to switch between different funds during the life of the policy. The value of a ULIP is linked to the prevailing market value of units you get after investing in the fund, which in turn depends on the fund’s performance.
In the event of death or permanent disability, the policy will provide the Sum Assured (to the extent you are covered) so that you can take comfort in knowing that your family is protected from sudden financial loss.