Kotak e-Term Plan
Kotak e-Term Plan provides a high level of protection to your loved ones in your absence.
Kotak Guaranteed Savings Plan
Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and provides an insurance cover against any eventuality.
Kotak E-Invest
Kotak e-Invest plan is a complete Unit-Linked Insurance Plan that can be customized as per your goals and needs.
Kotak Health Shield
Kotak Health Shield Plan helps secure your finances in sudden medical expenses such as Cardiac, Liver, Neuro, and Cancer (all early and significant illness stages/conditions of cancer), along with offering protection for personal accidents - in case of accidental death or disability.
Kotak Lifetime Income Plan
Kotak Lifetime Income Plan gives you the security of your income continuing throughout your life and in your absence throughout your spouse's lifetime!
Unit Linked Insurance Plans are a type of insurance plans that helps you reach your financial objectives by generating wealth through market-linked investments. Depending on your risk tolerance, you may distribute your money among debt, equities, or balanced funds using these instruments. This allows you to earn market returns that outperform inflation.
ULIP is like a mutual fund with an insurance cover added to it. However, there are some charges involved in ULIPs, unlike mutual funds, which have a single consolidated Total Expense Ratio (TER).
The Premium Allocation Charge (PAC) is a predetermined charge in ULIP policy. The percentage of the premium collected is normally imposed at a greater rate in the first few years of a policy. The original and renewal charges and the intermediary’s compensation expenses are usually included in this price.
The PAC is a percentage of the premium deducted, and the remaining funds are utilized to obtain units at the current Net Asset Value (NAV).
The price levied by the insurance provider for managing multiple funds in ULIP is known as the Fund Management Charge (FMC). It is a fee for fund management and is subtracted before reaching the NAV. Therefore, on a routine basis, the FMC is modified from NAV.
ULIP discontinued charges are imposed when an investor prematurely surrenders ULIPs. The minimum lock-in term for these investment programs is five years. ULIPs, on the other hand, can be surrendered before the lock-in term expires in the event of unforeseen circumstances that prevent regular premium payments. The surrender charge, which is computed as a percentage of the yearly premium amount, will be imposed in this situation.
Mortality costs are the ULIP plan charges for providing life insurance to the insured. These fees are determined by various characteristics, including the insured’s age, health condition, gender, and so on. Mortality costs are assessed every month and may alter or vary depending on the insurer’s criteria.Read more about mortality charges in ULIPs here
Switching is the process of moving money or investments from one option to another. A limited amount of fund switches may be permitted without charge each year, with other switches incurring a fee of ₹100 or ₹250 for each switch.
ULIPs allow for partial withdrawals of money. Some plans allow unlimited partial withdrawals, while others limit them to only 2-4 each year. These withdrawals might be free up to a specific point before costing ₹100 apiece as part of the ULIP policy charges, or maybe they’re free for an infinite series of withdrawals.
The reimbursement of the charges incurred by the insurer is known as administration cost in ULIP. These are monthly fees that may or may not be related to the insurer’s standard paperwork or activities. Administration costs are imposed by cancelling a proportionate number of the investor’s units from each fund.
You can discontinue paying your premiums before the five-year lock-in term expires. When you stop paying your premiums, your money will be put into a Discontinuance Fund. As stated in the policy terms, a Premium Discontinuance fee may be charged as part of ULIP plan charges. This is calculated as a percentage of the fund’s worth or the premiums.
To summarise, after going over the eight most essential types of charges in ULIP, it is apparent what to look out for when purchasing ULIP insurance. However, it is important to remember that these ULIP charges differ from one insurance company to the next.
Alongside, it is essential to know the tax benefits of investing in ULIP under Sec 80C of the Income Tax Act.
Ref. No. KLI/22-23/E-BB/492
