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!
The importance of a life insurance policy is now being taken seriously by almost everyone. This is because life has become uncertain today, and you never know what will happen next. The many incidents that happened in the past few years are making people realize the importance and necessity of insurance policies for themselves and their loved ones. Therefore, it is important to invest wisely in a comprehensive insurance policy to secure yours and your loved one’s future. However, choosing the right one that fits your financial requirements can be overwhelming.
While talking about insurance policies, it is important to understand what is linked and non-linked insurance plans and how they are different from each other. Also, you must have clarity over linked and non-linked life insurance plans to easily pick the right option for securing your future.
This article will discuss what is linked and non-linked insurance plans. And we will also discuss the key differences between linked and non-linked life insurance plans.
Also known as traditional insurance plans, the non-unit-linked insurance plans aim solely to offer financial protection to the family in case of an unfortunate demise of the policyholder or severe illness during policy tenure and as per the policy terms and guidelines.
These insurance plans are not linked to the market, and the full amount of the premium goes towards insurance coverage; they are called non-ULIP policies. The insurance company itself manages the whole portfolio, and there is no policyholder participation. Thus, it is also known as a non-participating unit-linked plan.
Insurance plans like term insurance, guaranteed savings plans, money-back policies, and other traditional insurance plans are categorized as non-unit-linked insurance plans.
As the name suggests, non-linked, non-participating policies do not take part in the insurance company’s business. You have to pay a fixed premium based on the sum assured and you receive guaranteed returns. The promised amount is paid to the nominee in case of the unfortunate demise of the policyholder.
1. These non-linked non-participating policies are not dependent on the market. Hence, the insurance cover is guaranteed regardless of the performance of the life insurance company.
2. One main difference between linked and non-linked insurance is market risk. Although the linked policies are usually handled by the professional fund managers, these are still subject to market risk. Non-ULIP policies provide low risk with guaranteed returns.
3. It guarantees a death benefit in your absence. For example, a non linked non participating life insurance plan offers the promised amount to your nominee and takes care of your family.
Also known as modern insurance plans, Unit Linked Insurance Plan is a financial tool that gives you the benefit of both insurance and investment in a single policy. In these plans, the premium paid is divided into two parts. One part goes towards insurance cover, while the remaining part is invested in market funds of the policyholder’s choice. The investment part gives returns based on fund selection and market performance.
These plans are highly flexible, allow you to choose investment options based on your risk appetite, and facilitate fund switching features. Unit Linked Insurance Plans offer a decent return. However, since a part of it is linked with the market, volatility is certainly a risk factor that should be considered beforehand. Some ULIPs offer bonuses and loyalty rewards too. Although, this depends on the insurer and the policy’s terms and guidelines.
1. ULIPS are flexible and provide a range of options to choose from. You can invest in high, medium, and low-risk investment options according to your needs and risk-taking appetite. You can also increase your investment through top-ups, once you begin to generate more income.
2. You can opt for a rider and get additional protection by customizing ULIPs. For instance, a critical illness benefit rider can financially support your family in case of a critical disease and even act as a source of lost income. Hence, riders can increase the effectiveness of your insurance policy.
3. ULIPs offer transparency and let you monitor the performance of your policy on a regular basis. You can check the Net Asset Value (NAV) of the ULIP plan updates and track your fund’s performance.
4. Many ULIPS also come with a free-look period. One can try the scheme for 15 days and decide if they want to continue it or not. In case you’re not satisfied with the policy, you will be paid back the premium amount. (Note: Application charges might be deducted in case of return.)
5. ULIPs offer some unparalleled tax benefits such as:
Criteria |
ULIP |
Non ULIP |
Investment flexibility |
|
|
Maturity benefit |
Calculate as per the Net Asset Value (NAV) at the time of maturity or policy surrender |
Pre-defined total sum assured and promise of guaranteed return at the time of opting for the policy |
Transparency |
All charges are upfront |
Might have some hidden charges |
Partial withdrawals |
Allows partial withdrawal after lock-in period |
Partial withdrawal is not allowed before maturity in most cases. There may be some exceptions |
Switching options |
Allows fund switching |
Policyholder has no participation in investment |
ULIPs are a modern tool of investment that save you from the worries of managing multiple financial avenues at once and enjoy a flexible investment plan with multiple benefits. You can consider all the factors such as your requirements, income generated, risk taking appetite, and switching options while making a decision. You can opt for Unit-Linked insurance plans for higher returns and additional benefits. However, if you want low-risk and guaranteed returns, non-unit linked insurance plan would be the right fit for you.
Ref. No. KLI/22-23/E-BB/492
