These are the exclusive insurance plans are basically an investment fund and term insurance plan, all in one. The investor does not participate in the benefits of the plan itself, but becomes based on the profitability of the funds he or she had chosen.
The premium paid by the customer can be deduced from the initial charges of insurance companies (basically, distribution and initial costs) and the remaining amount is invested in a fund (such as a mutual fund) by converting the amount in units based on the NAV of the fund on that date.
Mortality charges, fund management fees and certain other charges are deducted at regular intervals through cancellation of units of the funds invested.
A unit-linked insurance plan (ULIP) offers great flexibility to the customer in the form of greater liquidity and less time.
The customer has the option to choose the funds in your choice of whatever his / her insurance company has to offer. You can switch between funds without the need to opt for the insurance plan.
ULIPs got extremely popular in the heyday of Bull Run equity in India, as the returns generated by equity-linked funds beat any debt instrument or debt securities. However, with the stagnation of the economy and the stock market this product category slowed