What are the Charges Levied on ULIP?

Buy a life insurance plan in a few clicks

Now you can buy life insurance plans completely online right here.

  • Icon for Kotak Preferred e-Term Plan

    Kotak e-Term Plan

    Kotak e-Term Plan is a pure term plan that provides a high level of protection to your loved ones in your absence.

  • Kotak E-Invest Plan

    Kotak e-Invest is a comprehensive Unit Linked Life Insurance Plan that can be customized as per your goals and needs - be it protection; investment; financial security for child or retirement planning.

  • Icon for Kotak Guaranteed Savings Plan

    Kotak Guaranteed Savings Plan

    Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and insurance cover against any eventuality.

  • Icon for Kotak Preferred e-Term Plan

    Kotak Lifetime Income Plan

    Kotak Lifetime Income Plan gives you the assurance of your income continuing throughout your life and in your absence throughout the lifetime of your spouse!

  • Icon for Kotak Preferred e-Term Plan

    Kotak Health Shield

    The Kotak Health Shield Plan helps secure your finances in times of sudden medical expenses related to illness such as Cardiac, Liver, Neuro and Cancer (all early and major stages of illness /conditions of Cancer); along with offering protection for Personal Accident - in case of accidental death or disability.


Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.


What are the Charges Levied on ULIP?

View Plans
  • 16th Mar 2022
  • 222

What are the Charges Levied on ULIP?

Unit Linked Insurance Plan (ULIP) is an investment product having an insurance plan linked to it. In general, while opting for any plan, as an investor you should be careful and aware of the charges that are being levied or will be levied on the insurance plan. The best thing about Unit Linked Insurance Plan (ULIP) is that the charges are upfront and you are well aware of it while opting for a ULIP investment plan. However, before discussing the charges levied on ULIP, it is important to know ULIP meaning in brief.

ULIP Meaning

Unit Linked Insurance Plan is a financial product that offers investors a combination of insurance and investment in one policy. The ULIP policyholders have to pay regular premiums, that cover both insurance needs and investment. There is a lot that can be discussed to understand ULIP, but in short, it is a combination of investment and insurance.

What are the charges levied on ULIP?

Based on IRDAI guidelines, there are different types of charges levied on ULIP. These charges are broadly divided into different parts. You can go through the policy documents, compare them with other ULIP plans before you choose the right ULIP. This article briefly discusses these 6 types of charges in ULIPs.

6 types of charges in ULIPs

1. Premium Allocation Charge

Also known as PAC, the premium allocation charge is deducted as a fixed percentage charge of the premium received. The PAC is levied at a higher rate in the initial years of the policy. This charge in most ULIP policies includes expenses for initiation, renewals, and commissions.

2. Mortality Charges

Mortality Charges in ULIP are levied to cover the cost of the insurance coverage promised as per the insurance plan. These charges are dependent on various factors like amount of the coverage (assured sum), age of the policyholder, among others. These charges are deducted on a monthly basis. Mortality charges in ULIP are proportionally deducted from each of the funds selected.

3. Fund management charge

Fund management charge (FMCs) is the charge levied by the insurance provider for managing various ULIP funds. This charge is deducted before calculation of the Net Asset Value (NAV), and is adjusted daily based on the NAV. The maximum amount allowed to be charged for this FMC is 1.35% per annum of the fund and is charged daily. The FMCs vary on different funds.

4. Policy administration charge

Policy administration charge is different from the Premium Allocation Charge (PAC). This is a monthly fee charged for the administration of policy.

5.Partial withdrawal charge

ULIPs allow you to withdraw funds from the policy partially before maturity based on policy guidelines. However, for a partial withdrawal, you have to pay one of the ULIP plan charges called partial withdrawal charge. This charge may vary from plan to plan.

6. Fund switching charge

As ULIPs allow you the switch between funds to improvise on investment, you have to pay a fee, based on the policy guidelines. Certain policies allow a certain number of switching between funds each year. However, if you exceed the limit, a fixed charge can be levied per switch.

There may be other types of charges in ULIPs that may be levied based on the service availed. Do remember, not every insurance company levies these charges. There are many insurers who waive off ULIP charges making these policies more accessible for policy buyers. Thus, it is highly recommended to read policy documents carefully to understand these different types of fees levied on your ULIP policy.

- A Consumer Education Initiative series by Kotak Life

Also read

    • 30th Nov 2021
    • 213

    Long Term Investment Guide for Your Retirement

    A retirement plan ensures sufficient financial coverage & it's crucial to prioritise your long-term investments when you're investing for your retirem...

    Read more
  • Difference Between Unit-Linked Plans and Non Unit-Linked Plans

    Plans that pay dividends or bonuses can be classified as Unit Linked Plans. Non-Linked Insurance Plans are traditional plans that are not directly lin...

    Read more
    • 2nd Mar 2022
    • 142

    Which Is Better: ULIP or SIP?

    After examining the features of ULIP & SIP, you can choose which investment option provides you with the most benefit. Read to know more about which i...

    Read more

Related Plans

  • Kotak Premier Life Plan

    Kotak Premier Life Plan

    Kotak Premier Life Plan is a limited premium paying participating whole life plan, where you can choose to receive bonus payouts even after premium pa...

    Know more
  • Kotak Group Secure One

    Kotak Group Secure One

    Kotak Group Secure One provides a comprehensive protection solution to enable your team members to protect their loved ones in the unfortunate event o...

    Know more
  • Kotak Leave Encashment Group Plan

    Kotak Leave Encashment Group Plan

    Kotak Leave Encashment Group Plan is designed to cater to the needs of employees’ leave encashment liabilities increasing over a period of time.

    Know more
  • Kotak Health Shield

    Kotak Health Shield

    Health is the greatest blessing for all human beings. Today, every individual is aware that the number of illnesses are increasing day by day and so a...

    Know more