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Features
Ref. No. KLI/22-23/E-BB/492
A Unit Linked Insurance Plan (ULIP) offers life cover along with investment in equity, debt, or balanced funds. Your returns are based on fund performance, which is tracked through NAV. If you're wondering how does ULIP work, it simply splits your premium between protection and market-linked growth.
A Unit Linked Insurance Plan (ULIP) is a dual-purpose financial product that combines life insurance with investment. It ensures financial protection for your loved ones while enabling wealth creation for long-term goals like a dream house or retirement. A portion of your premium goes towards life cover, and the rest is invested in equity or debt funds, offering flexibility based on your financial preferences.
To understand how ULIP works, think of it as a financial multi-tool that combines the benefits of life insurance and market-linked investments. When you pay a premium, one portion is allocated toward life cover to protect your family, while the other is invested in equity, debt, or hybrid funds based on your financial goals and risk appetite. This dual-purpose structure provides both security and potential for long-term wealth creation. ULIPs also offer the flexibility to switch funds, customize portfolios, and enjoy tax advantages—making them a smart option for disciplined, goal-based financial planning.
Let’s dive deeper into its mechanics and advantages.
Understanding what is ULIP plan and how ULIP plan works in India highlights its unique ability to combine insurance and investment in one powerful product. Leveraging the benefits of ULIP effectively can help you achieve your long-term financial aspirations.
Unit Linked Insurance Plans (ULIPs) come with a range of features designed to provide flexibility, growth potential, and financial security. Below, we explore some key aspects that will help you understand better how ULIP works and why is it a popular choice for investors.
Some ULIP plans let you look into both your current and future investments by allowing you to transfer assets from one fund type to another in a structured manner depending on the type of risk appetite you have. They also enable you to effectively manage your assets in order to maximize the returns on your investment.
You can convert your current investment from one plan type to another using Unit Linked Insurance Plans. This switching system enables you to shift all of your funds according to your market view and life stage.
You also get partial withdrawal facilities with ULIPs, typically after the ULIP lock-in period. This feature allows you to access a portion of your accumulated funds for emergencies or planned expenses without compromising the growth potential of your remaining investment.
Additional contributions help you maximize your returns and exploit favorable market conditions. It is an excellent option for those looking to boost their fund value beyond the regular premium contributions of the insurance plan
Premium payments you make towards ULIP renewal or new policies are eligible for tax deductions, and the returns from the policy may also be exempt under certain conditions.
ULIPs offer flexible premium payment options, allowing you to choose a frequency—monthly, half-yearly, annually, or one-time—that fits your financial planning. This flexibility ensures your policy stays active without straining your budget. Additionally, the ULIP renewal process is straightforward, making it easy to maintain uninterrupted coverage and continue building your investment.
Unit Linked Insurance Plans (ULIPs) offer a unique blend of life insurance and investment, making them an attractive choice for individuals aiming to secure their family’s future while building wealth. With features like fund switching, partial withdrawals, and tax benefits, ULIPs provide flexibility and growth potential to meet diverse financial goals.
Explore your options today and choose a ULIP that aligns with your long-term aspirations and investment preferences.
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A Unit Linked Insurance Plan (ULIP) is a hybrid financial product that combines life insurance with investment. It allows policyholders to allocate part of their premium towards life cover and the rest into various funds like equity or debt, depending on their investment goals and risk appetite.
2
ULIPs blend insurance and investment by using a portion of the premium for life insurance coverage, ensuring financial security for the policyholder’s family, while the remaining amount is invested in market-linked funds for wealth creation. This dual approach helps achieve financial goals and provides a safety net.
3
The main components of a ULIP plan include premium allocation, fund options (equity, debt, or balanced), Net Asset Value (NAV) for tracking fund performance, and benefits like partial withdrawals and fund switching. The plan also offers tax benefits under Section 80C.
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Premiums in a ULIP are divided into two parts: one portion is used for life insurance coverage, and the other is allocated to chosen investment funds. The allocation depends on the policyholder’s preferences and fund management strategies.
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ULIPs offer flexibility in fund selection, allowing policyholders to invest in equity, debt, or hybrid funds based on their risk tolerance and financial goals. Additionally, fund switches during the policy term help adapt to changing market conditions.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Features
Ref. No. KLI/23-24/E-BB/1052
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
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