14 ULIP Charges You Should Know About

When investing in Unit-Linked Insurance Plans (ULIPs), it’s important to understand the various charges involved. ULIPs combine life insurance with market-linked investments, but they come with a range of charges. These charges cover aspects such as fund management, policy administration, life coverage, and additional services. Knowing these charges helps you make informed decisions and effectively manage your investment to maximize potential returns while staying financially protected.

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4.2 Crore Policies Sold

ULIP Plans

Plan starting from ₹1,000/month
Save upto ₹46,800 in Tax under section 80C^{^}
Zero LTCG Tax^¶
In built life cover

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4.2 Crore

Policies Sold

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7.7 Crore

Registered Consumer

Insurance Partners

4.2 Crore

Policies Sold

Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.

Fund Name

AUM

NAV

Returns (in %)

3 Year

5 Year

10 Year

High Growth Fund

Max Life

AUM:8,482 Cr

8,482 Cr

NAV

119.99

1.59%

Returns

23.95%

Returns

31.9%

Highest Returns

Returns

20.47%

Get Details

Whole Life Mid Cap Equity Fund

Tata AIA

AUM:13,435 Cr

13,435 Cr

NAV

158.69

2.49%

Returns

21.08%

Returns

27.7%

Highest Returns

Returns

20.43%

Get Details

Virtue II

PNB Metlife

AUM:3,532 Cr

3,532 Cr

NAV

77.53

1.12%

Returns

17.59%

Returns

26.28%

Highest Returns

Returns

17.97%

Get Details

Accelerator Mid-Cap Fund II

Bajaj Allianz

AUM:6,452 Cr

6,452 Cr

NAV

86.49

1.27%

Returns

17.79%

Returns

22.67%

Highest Returns

Returns

16.96%

Get Details

Opportunities Fund

HDFC Standard

AUM:40,966 Cr

40,966 Cr

NAV

78.44

1.16%

Returns

15.75%

Returns

23.42%

Highest Returns

Returns

16.86%

Get Details

Fund Name

AUM

NAV

Returns (in %)

3 Year

5 Year

10 Year

Whole Life Aggressive Growth Fund

Canara HSBC Oriental Bank

AUM:869 Cr

869 Cr

NAV

93.59

0.82%

Returns

16.11%

Returns

20.41%

Highest Returns

Returns

15.83%

Get Details

Whole Life Stable Growth Fund

Canara HSBC Oriental Bank

AUM:266 Cr

266 Cr

NAV

61.92

0.32%

Returns

12.53%

Returns

15.66%

Highest Returns

Returns

12.78%

Get Details

Balanced Fund

Canara HSBC Oriental Bank

AUM:380 Cr

380 Cr

NAV

48.06

0.34%

Returns

11.49%

Returns

14.21%

Highest Returns

Returns

11.91%

Get Details

Asset Allocation Fund II

Canara HSBC Oriental Bank

AUM:341 Cr

341 Cr

NAV

31.32

0.18%

Returns

9.45%

Returns

12.98%

Highest Returns

Returns

11.36%

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Save N Grow Money Fund

Canara HSBC Oriental Bank

AUM:68 Cr

68 Cr

NAV

58.7

0.37%

Returns

8.69%

Returns

11.34%

Highest Returns

Returns

10.82%

Get Details

Fund Name

AUM

NAV

Returns (in %)

3 Year

5 Year

10 Year

Builder

Canara HSBC Oriental Bank

AUM:243 Cr

243 Cr

NAV

89.55

0.06%

Returns

6.87%

Returns

8.26%

Returns

8.91%

Highest Returns

Get Details

Whole Life Income Fund

Canara HSBC Oriental Bank

AUM:802 Cr

802 Cr

NAV

38.31

0.03%

Returns

6.22%

Returns

7.01%

Returns

8.18%

Highest Returns

Get Details

Debt Fund

Canara HSBC Oriental Bank

AUM:482 Cr

482 Cr

NAV

36.29

0.04%

Returns

5.92%

Returns

6.91%

Returns

7.93%

Highest Returns

Get Details

Conservative Fund

Canara HSBC Oriental Bank

AUM:233 Cr

233 Cr

NAV

55.4

0.09%

Returns

7.01%

Returns

7.98%

Highest Returns

Returns

7.92%

Get Details

Protector

Canara HSBC Oriental Bank

AUM:307 Cr

307 Cr

NAV

64.22

0.06%

Returns

6.07%

Returns

7.01%

Returns

7.89%

Highest Returns

Get Details

Disclaimer :
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

What are ULIP Plans?

Unit Linked Insurance Plans (ULIPs) are a type of financial product that combines insurance coverage with investment. When you invest in a ULIP, a part of your premium goes toward providing life insurance, while the remaining amount is invested in various market-linked assets like equities, debt, or a combination of both, depending on the policyholder's risk appetite.

What are ULIP Charges?

When considering the best ULIP Plans, it is important to understand the associated charges. These charges are deducted from your premium payments or the fund value and cover the costs incurred by the insurance company for purposes like-

Administering your policy
Managing the investments
Providing life insurance coverage

IMPORTANT NOTES:

The Insurance Regulatory and Development Authority of India (IRDAI) has set limits on the charges that insurance companies can impose on ULIPs.
- IRDAI caps the total annualized charges of ULIPs at 3% for the first 10 years of a policy. It would be 2.25% for a policy longer than 10 years.
- This applies to both regular premium and single premium ULIPs.
ULIP charges are subject to Goods and Services Tax (GST).
While ULIPs do have charges, they also offer potential tax benefits on your premiums and maturity proceeds.
ULIP charges are mandated to be evenly distributed during the lock-in period.

Types of Charges in ULIP

Let us explore the 14 different types of ULIP charges from the following:

ULIP Charges	Description	Example/Details
Premium Allocation Charges	Deducted from the premium before investing to cover initial administrative expenses and agent commissions.	E.g., 10% charge on Rs 1,00,000 premium means Rs 10,000 deducted; Rs 90,000 invested.
Policy Administration Charges	Monthly or annual charges for policy maintenance, record-keeping, and customer service.	Generally remains the same throughout the policy term.
Fund Management Charges	Annual charges for managing the investment funds within the ULIP, including costs of research and fund administration.	Capped at 1.35% per year by IRDAI.
Surrender/ Discontinuance Charges	Applied when a ULIP is surrendered before lock-in completion or premiums are discontinued, covering costs incurred by the insurer due to early termination.	Rs 1000-3000 for the first four years; none after the fifth year.
Partial Withdrawal Charges	Applied when policyholders make partial withdrawals before the lock-in period ends. Charges vary by insurer and policy terms.	Specific conditions and charges apply.
Mortality Charges	Fee for providing death cover, calculated based on age, health, and sum assured.	Varies per individual; deducted from the invested funds monthly.
Switching Charges	Charges for switching between different fund options after a fixed number of free switches.	Rs 100-500 per switch after free switches are used.
Premium Redirection Charges	Fees for redirecting future premiums to different funds without changing the existing fund structure.	Applied per insurer’s charge structure.
Guarantee Charges	Covers the cost of providing guaranteed returns or capital protection on certain ULIPs.	For example, ULIP promises a 125% return after 12 years.
Rider Charges	Additional charges for optional coverage add-ons like critical illness or accidental death benefits.	E.g., critical illness rider.
Goods & Services Tax (GST)	Tax on services provided to maintain your investment, such as premium allocation, policy administration, fund management, surrender, and reinstatement.	Applied as per prevailing tax laws.
Top-up Charge	Fees for investing surplus money above regular premium payments.	Certain percentage deducted from the top-up amount.
Premium Discontinuance Charge	Charges for stopping premium payments before the lock-in period ends.	Percentage of fund value or premium; funds locked in a Discontinuance Fund.
Miscellaneous Charges	Smaller fees for changes like premium payment mode or beneficiary updates.	For example, changing premium payment from yearly to quarterly.

Know the ULIP Plan Charges in your Policy

To get accurate details of the charges in your ULIP policy, you can consider these sources:

Product Brochure: This document provides a comprehensive overview of the ULIP plan, including details on charges, benefits, terms, and conditions.

Sales Benefit Illustration: This is a personalized document prepared by the insurance advisor or the company. It outlines the projected benefits, charges, and returns based on your specific investment amount and tenure.

Insurance Advisor: Your insurance advisor should be able to explain and provide details on all charges associated with the ULIP. They can also give you personalized advice based on your financial goals.

Policybazaar: If you purchased your ULIP through Policybazaar, you can log in to your account or contact their customer support for detailed information on charges applicable to your policy.

Policy Documents: Always refer to your policy documents, which include the policy terms and conditions, to understand the charges in detail. This is usually the most comprehensive source of information.

In Conclusion

ULIP (Unit Linked Insurance Plan) charges encompass various fees such as premium allocation, policy administration, mortality, fund management, and surrender charges. Understanding these charges is crucial for making informed decisions about investment and insurance goals.

†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
+Returns Since Inception of LIC Growth Fund
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.