Unit linked Insurance Plans (ULIP) provide the twin benefit of providing the benefits of investing in the stock market and covering your risks. It is important to understand that a Unit Linked Life Insurance product is different from the traditional insurance products and are subject to the risk factors.
The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions.
Other than the fact that the investment risk in investment portfolio is borne by the policyholder, let us take a look at the different charges in a ULIP.
| Particulars | LIC | ICICI Pru | HDFC Standard | Bajaj Allianz |
| Plan name | ||||
| Premium allocation | 24% | 20% | 70% | 25% |
| Mortality Charges (/1000 ) | 1.80 for age 35 | 1.46 for age 30 | NA | 1.74 for age 30 |
| Fund Management Charges | 0.75% for Bond 1.50% for growth | 0.75 % for preserver to 2.25% for multiplier | 0.80% | 0.95% for Bond, 1.75 % for growth |
| Policy Charges | Rs 60 per month in first year, Rs 20 after that. | No other charges, but FMC can be raised to 3.5% | Rs 20 per month for administration | Rs 600 per annum inflating at 5% per annum |
| Switching charges | 4 free, Rs 100 after four | 4 free, Rs 100 after four | 24 in a year free, Rs 100 after that. | 3 free, Rs 100 after that |
| Miscellaneous charges | Rs 50 for alteration | Switching can increase to Rs 200 | Charges for revival, withdrawal, etc at Rs 250 per request. | Rs 100 per transaction for revival, etc |
There are a few parameters like the flexibility of premium paying term, the amount of cover available for disability, illness and accident which has a wider variation among the Insurers.
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4 comments:
Hi Ranjan,
The information you mentioned about HDFC is wrong. I recently bought ULIP from HDFC. They invest only 40% as investment, rest 60% is charged as commission.
So if you invest Rs.100 - Rs.40 is invested & rest Rs.60 is charged as their commission.
The second year the commission charged by HDFC is 50%, the year after - Nil. From the 4th year the cycle starts again.
Thanks Alex for poiting it out. HDFC might have made some improvements from 70% to 60%. But it's still too large!!
Insurers have the habit of bringing out similar products with new names & slight modifications.
Hi Ranja,
I took ICICI Prudential ULIP(Multiplier fund), and paid 4 years premium (40000 for 10 Lac), but the return is less (Just 180000 after four year), So I'm thinking to do one of the following,
1. Switch - Switch from Multiplier to Balanced fund which has good NAV history
2. Stop ICICI ULIP and withdraw money and invest in good MF and take term insurance.
I'm really confused, request you to give your opinion..
Hi Ranja,
I took ICICI Prudential ULIP(Multiplier fund), and paid 4 years premium (40000 for 10 Lac), but the return is less (Just 180000 after four year), So I'm thinking to do one of the following,
1. Switch - Switch from Multiplier to Balanced fund which has good NAV history
2. Stop ICICI ULIP and withdraw money and invest in good MF and take term insurance.
I'm really confused, request you to give your opinion..
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