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Some of the Best Investment Plans to invest in this year for Tax Saving Purpose

Tax Savings Plans Entry Age Minimum Premium Premium Allocation Charge Policy Admin charge No. of free switches in a year
Bajaj Allianz Future Gain 1 to 60 years Rs 25,000 0% to 1.5% Rs 33.33 per month Unlimited
PNB Metlife Smart Platinum 7 to 70 years Rs 30,000 to Rs 60,000 1.25% p.a Rs 40 4
MAX Life Fast Track Growth Fund 18 to 50 years Rs 25,000 to Rs 1 lakh 2%(Single Premium) to 4% (Annual premium) Rs 1,500 per year 12
SBI Life Wealth Assure 8 to 65 years Rs 50,000 3% of Single Premium Rs 45 per month 2
HDFC Life Pro Growth Plus 14 to 65 years Rs 2,500 to Rs 10,000 2.5% of Annual premium Rs 500 per month Unlimited

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Unit linked insurance plan (Ulip) is a hybrid product, a combo of protection and saving. It not only provides life insurance but also helps channel one’s savings into various market-linked assets for meeting long-term goals. 
In most Ulips, there are 5 to 9 fund options with varying asset allocation between equity and debt. A Ulip can have a duration of 15 or 20 years or more but the lock-in period is 5 years.

1. What is ULIP

ULIP or Unit Linked Insurance Plan is a mix of insurance along with investment. From a ULIP, the goal is to provide wealth creation along with life cover where the insurance company puts a portion of your investment towards life insurance and rest into a fund that is based on equity or debt or both and matches with your long-term goals. These goals could be retirement planning, children’s education or another important event you may wish to save for.

2. How does ULIP work?

When you make an investment in ULIP, the insurance company invests part of the premium in shares/bonds etc., and the balance amount is utilized in providing an insurance cover. There are fund managers in the insurance companies who manage the investments and therefore the investor is spared the hassle of tracking the investments. ULIPS allow you to switch your portfolio between debt and equity based on your risk appetite as well as your knowledge of the market’s performance. Benefits like these which offer investors the flexibility of switching is a huge factor contributing to the popularity of these investment instruments.     



3. Lock-in-period of ULIP

One of the changes brought about by the Insurance Regulatory and Development Authority of India (IRDAI) in the year 2010 as regards ULIPs, was to increase the lock in a period from 3 years to 5 years. However, insurance being a long-term product, as an investor you may not really reap the benefit of the policy unless you hold it for the entire term of the policy which can range from 10 to 15 years.

4. Benefits of ULIP

  • Life cover: First and foremost, with ULIPs you get a life cover coupled with investment. It offers security that a taxpayer’s family can fall back on in case of emergencies like the untimely death of the taxpayer, etc.
  • Income tax benefits: Not many are aware that the premium paid towards a ULIP is eligible for a tax deduction under Section 80C. Additionally, the returns out of the policy on maturity are exempt from income tax under Section 10(10D) of the Income-tax Act. This is a dual benefit that you can claim with this policy
  • Finance Long Term Goals: If you have long-term goals like buying a house, a new car, marriage, etc., then ULIP is a good investment option because the money gets compounded. As a result, the net returns are generally more. This stands true even if you want to exit after the 5 year lock-in period in comparison to not having invested the amount at all and retaining it in a savings account or in the form of an FD. But, under ULIP, the mantra is to always keep the policy going for a longer time horizon to reap the best out of it
  • The flexibility of a portfolio switch: As already mentioned, ULIPS are usually designed in a way that they allow you to switch your portfolio between debt and equity based on your risk appetite as well as your knowledge of how the market is performing. Insurance companies, on the other hand, allow a very few numbers of switches free of cost


5. Things to consider as an investor

Following are some important factors you should weigh in before investing in ULIPs:

  • Personal financial goals: If your financial goal is about wealth creation and you want to save money for retirement, ULIP is one of the best options available
  • Compare ULIP offerings: Once you have determined your financial goal and the type of ULIP that will help you achieve it, the next step would be to compare the ULIP offerings in the market. Look for a comparison in the form of background expenses, premium payments, ULIP performance, etc. Also, investigate the nature of funds that the ULIP invests in to ascertain the returns from investments in the particular ULIP
  • Risk factor: Since ULIP investment is not as diversified as compared to ELSS, the risk in ULIP is probably a bit high compared to schemes like ELSS
  • Investment horizon: ULIPs have a lock-in period of 5 years. If a ULIP is surrendered in the first three years, the insurance cover would cease immediately. However, the surrender value can be paid only after three years


6. Types of ULIPs

ULIPs are categorized based on the following broad parameters:

a. Funds that ULIPs invest in

  i. Equity Funds: Where the premium paid is invested in the equity market and thereby is subject to higher riskii. Balanced funds: Where the premium paid is balanced between the debt and the equity market to minimise the risk for investorsiii. Debt Funds: Where the premium is invested in debt instruments which carry a lower risk but in turn also offer a lower return

b. End use of Funds

  i. Retirement Planning: For those of you who plan to invest for the retirement days while you are still employedii. Child Education: You can investment with a long-term goal of saving to fund your child’s education or save for some unforeseen circumstancesiii. Wealth Creation: You can make investments to build a heavy corpus that you can utilize for a future financial goal

c. Death benefit to Policy Holders

i. Type I ULIP: This pays higher of the assured sum value or the fund value to the nominee in case of death of the policyholderii. Type II ULIP:  This pays the assured sum value, plus the fund value to the nominee in case of the death of the policyholder


7. ULIPs Vs Mutual Funds

Here is a comparison between the two:

Particulars ULIPs Mutual Funds
Nature Investment cum insurance product Pure Investment product
Withdrawal Only after lock-in-period of 5 years Can be withdrawn anytime
Switching Alternating between funds is permitted and not subject to taxation. Switching is permitted between schemes of the same fund house. However, it’s treated as a redemption and the resulting capital gains are taxable.
Charges Mortality charges, premium allocation charge, fund management charge and administration charges No entry load, the annual fund management charges apply and an exit load, if applicable.

8. Some of the ULIPs to invest in this year


ULIP Plans Entry Age Minimum Premium Premium Allocation Charge Policy Admin charge No. of free switches in a year
Bajaj Allianz Future Gain 1 to 60 years Rs 25,000 0% to 1.5% Rs 33.33 per month Unlimited
PNB Metlife Smart Platinum 7 to 70 years Rs 30,000 to Rs 60,000 1.25% p.a Rs 40 4
MAX Life Fast Track Growth Fund 18 to 50 years Rs 25,000 to Rs 1 lakh 2%(Single Premium) to 4% (Annual premium) Rs 1,500 per year 12
SBI Life Wealth Assure 8 to 65 years Rs 50,000 3% of Single Premium Rs 45 per month 2
HDFC Life Pro Growth Plus 14 to 65 years Rs 2,500 to Rs 10,000 2.5% of Annual premium Rs 500 per month Unlimited


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9. Income Tax Benefits

Premium paid on ULIPs is eligible for a deduction under Section 80C up to a maximum of Rs 1.5 lakhs during a year. Further, the amount you receive on maturity is tax exempt under Section 10(10D).

10. Types of fees and charges

In every investment, there are various charges that need to be paid. In the case of ULIP, the charges can be broadly classified as:

a. Premium Allocation Charge

  Premium Allocation Charge is deducted as a fixed percentage from the premium paid in the initial years of the policy. This is charged at a higher rate. The charges include the initial and renewal expenses and intermediary commission expenses. It is a front load charge as it is deducted from your premium paid.

b. Mortality Charges

  This charge is to provide for the insurance coverage under the plan. Mortality charges depend on a number of factors like age, sum assured, etc., and is deducted on a monthly basis.

c. Fund Management Charges

  Fund Management Charge is the fee imposed by the insurance company for the management of the various funds in the ULIP. It is levied for the management of the funds and is deducted before arriving at the NAV figure. The maximum charge allowed is 1.35 percent per annum of the fund value and is charged daily. Generally, insurers levy the maximum amount allowed in equity funds, while the charge on non-equity funds is much lower.

d. Partial Withdrawal Charge

  ULIPs have the option of partial withdrawals of funds. Some plans offer unlimited withdrawals, but some restrict it to 2-4 withdrawals. These withdrawals can be free for up to a certain limit or you can be charged based on your transactions.

e. Switching your funds

  The moving of funds or investments between options is called switching. There are options to switch your funds for free up to a certain limit per year. Any further changes might incur a charge of Rs. 100 -Rs.250 per switch.

f. Policy administration charges

  This charge is levied for the administration of the policy and it is deducted on a monthly basis by the cancellation of units from all funds chosen. This charge can be levied at a fixed rate or as a percentage of your premium.   ULIP as a mode of investment is a good choice given it offers the benefits of insurance with investment. With part of the investment spread across stock markets, you stand to gain higher returns. This also means that your investment is subjected to market risks. If your risk profile meets the tradeoff, this could be worth exploring.

Savings Investment Plans

Savings Investment plans are life insurance plans that offer multiple avenues to not only save but also to grow your money. These investment plans help in systematic and disciplined investment ensuring that you and your family achieve your financial goals. Savings and Investment plans help you save regularly and be adequately prepared to meet family’s financial needs in the future. These investment plans offer various features that help meet your specific financial needs with investments made according to your appetite to take risks.
Besides providing an investment avenue, saving investments plans also provide insurance coverage. A death benefit is promised under the plan which is paid if the insured dies during the chosen policy tenure. Thus, saving investment plans not only create a corpus, they provide protection too.

What is Saving Investment Plan?

Saving-Investment plans are customized Investments avenues for an individual with the objective to create a disciplined and periodic investment in various funds and finally achieve their future long-term financial goals along with an element of insurance support.
There are various Types of Savings Investment Plan in the Indian Insurance industry. The most common types of investment plans available in Indian Market are:
I. Participating Endowment Plan
II. Unit Linked Investment Plans (ULIP)
III. Guaranteed Return Plan
IV. Money Back Plan
V. Monthly Income Plan
Any insurance product with an element of savings in terms of maturity benefit is called a Savings Investment Plan.

Participating Endowment Plans

The first such type are Endowment Plans. This type of plans are perfect for individuals who wishes to avail the dual advantage of investment plus insurance under the same roof. Endowment Plans provide the comfort of a guaranteed maturity benefit as well as a portion of the company’s profits as bonus. This type of plans can be taken to fulfil long as well as short term objectives in one’s life.
ULIP or Unit Linked Plans are a combination of insurance with investment opportunity where the maturity amount is not guaranteed as in the case of endowment plans. In this type of plans, the maturity amount depends on the fund chosen and the performance of the fund.
In ULIPs, the policyholder has the option to select the type of investment where his money will be allocated and whether it would be equity or debt, based on his own risk appetite.
Unit Linked Insurance Plans are considered to be one of the best investment avenue in India for those who are looking for coverage cum investment options. ULIPs offer both financial protection as well as life coverage. Even though the return on ULIP are subject to market risk, they give a leverage to make direct market investments and hence the final yield is much better as compared to other investment options. The ULIPs funds can be invested either into equity or debt funds or into a combination of both. The market value of the equity fund or debt fund is evaluated on the NAV (Net Asset Value) criteria.

Guaranteed Return Plan

Guaranteed Return Plans are a different variant of endowment plans. These plans offer assured return to the policyholder at the maturity of a specific investment policy. There are various investment plans available in the market under this category and the investor can compare to know the guaranteed return value and the set of terms and conditions of the said plan. These various conditions which could be applicable are Highest NAV, Maturity Guarantee, retirement benefit etc.
Money Back Plans are anticipated Endowment Plans. It means that the maturity benefit is guaranteed and would be payable in pre-defined intervals. For example, a money back plan would have survival benefits paid out to the policyholder every 5 years and the remaining amount with bonus on maturity. These plans help meet the interim liquidity crunches of an individual and are usually planned as per the milestones in a person’s life like children educational expenses, marriage expenses, etc.

Monthly Income Plan

Monthly Income Plans are guaranteed traditional plans with a monthly outflow of income after a certain period. In this type of a plans, either maturity benefit or death benefit is payable monthly instead of a lump sum.

Benefits of Savings Investment Plan

  • Market Linked Returns: Savings investment plan especially ULIPs offer the prospect to earn market linked returns since a part of the premiums paid in invested in various market linked funds and then onwards in different market instruments such as debt and equity in a fixed ratio. The proportion of debt and equity depends on the investor’s risk appetite. In case the market performs well, the investor will earn good returns.
  • 3 in 1 benefit of Investment, Savings and Life Protection : Plan such as endowment and Unit linked plans brings true value of an investment with multiple benefits benefit of life insurance and savings at market linked returns, making them one of the best investment options. This helps one to instill the habit of investing saving which is crucial in building wealth over a period of time.
  • Flexibility: Savings Investment Plan comes in a wide assortment of investment avenues with significant scope for flexibility. The features such as switching between investment funds as per risk appetite and facility to withdraw funds partially and multiple premium payment options makes saving cum investment plan a must in everybody’s investment kitty.
  • Protection to loved ones: Saving Investment Policy fetches return on the investments along with insurance coverage. This ensures that in the case of any unfortunate event to the insured, the Nominee will receive the sum insured as well as the fund value. The return is provided as a Lump sum amount or in the form of monthly/quarterly/half yearly payments.

Tax Saving Investment Plans

There are various plans wherein tax assets can claim benefits for the amount invested in Tax saving plans. Under the section 80 C and 80 D of Indian Income-tax Act, an individual is entitled to a deduction on the investment done or premium payment made. Such investments consist of funds such as Equity Linked Saving Scheme, Life Insurance, Fixed Deposits, Public Provident Fund, NSS and Bonds.
Points to remember before investing in Saving Investment Plan:

Long Term and Short Term Financial Goals

The policyholder should clearly indemnify their long term and short term financial objective prior investing in any saving Investment policy. This would allow the policyholder to decide what type and kind of investment to buy. For the ease of completion, the investor can set goals for specific time frame such as 1 year, 3 years, 5 years, 10 years, and so on. The Broad objectives to choose most suitable investment plan may include objectives such as purchasing a house, child’s higher education and marriage or retirement planning.

Understand Risk and Returns Ratio

Before opting for any saving investment avenue, one should clearly understand their risk capability and financial backing to match that risk. It is very important to strike a right balance between risk and returns associated with the policy. One can invest in an aggressive plan with the possibility of better returns however with higher risk.It is generally advisable that young investor with less financial dependency can go in for high-risk investment options, whereas investors6 with age and greater financial responsibilities, should opt for safer investment options with low to moderate risk.

Combine Liquid and Fixed option in a Saving Plan

One cannot deny the fact that Life is full of uncertainty and no one can predict what will happen next. For any unexpected situations and the crisis it is astute to combine fixed and liquid investments in a proportion. This would enable the investor to have enough cushions during any exigency. For any urgent requirement of cash, the liquidity aspect of any fund can be of great help.

Start Early and small

It is always advisable to start with a small investment portfolio and then gradually increase the kitty with experience. Tax savings funds should ideally be a part of each and every investor’s portfolio. One may opt for various premium payment frequencies ranging from monthly to annually.

Research Thoroughly These Best Savings Plans

There are numerous saving investment policies available in the market. Each and every plan has its own risk associated with it and the return may vary. In order to avoid investing in a wrong plan, the investor should ideally spend a good amount of time in researching about the fund before investing. Researching through the internet is one great way to know the best suited investment options. Apart from online research, Newspaper, magazines and journals are good sources of information related to the best saving investment options in India.

Best Investment Plans

1 ULIP Future Generali Easy Invest Online Plan 0-50 years 18-70 years 10 to 20 years
2 ULIP SBI eWealth 18-50 years 60 years 10-20 years
3 ULIP HDFC Life Click2invest 30 days – 65 years 75 years 5-20 years
4 ULIP ICICI Pru Smart Life 20-54 years 30-64 years 10-25 years
5 ULIP Aegon iInvest 7-55 years 70 years 10/15/20/25 years
6 ULIP Bajaj Future Gain 1-60 years 70 years 10 years
7 ULIP Bajaj Allianz Fortune Gain 1-63 years 70 years 7-30 years
8 ULIP Bharti AXA eFuture Invest 18-59 years 69 years 10 years
9 ULIP Aviva iGrowth 18-50 years 60 years 10 to 20 years
10 ULIP Bajaj Allianz Retire Rich 30-73 years 80 Years 7-30 years
11 Child Plan SBI LifeSmart Scholar 0-17 years 65 years 8-25 years
12 Child Plan HDFC SL YoungStar Super Premium 18-55 years 65/75 years 10 to 20 years
13 Child Plan Aegon Life Rising Start Plan 1-15 years 75 years 10/15/20 years
14 Pension Plan HDFC Life Pension Surplus Plan 35-65 Years 75 Years 10/15/20 years
15 Pension Plan ICICI Pru Such Retirement Plan 35-70 years 80 years 20-25 years
16 Endowment Plan Kotak Classic Endowment Plan 0 – 60 years 75 years 20 years
17 Endowment Plan Birla Sun Life Insurance Bachat 30 days – 60 years 80 years 10-20 years
18 Insurance Plan Max Life Platinum Wealth Plan 18-55 years 65/70 years 10-20 years
19 Insurance Plan SBI Life Smart Wealth Builder Plan 7- 60 years 70 years 20 years
20 Insurance Plan HDFC Life Pro-Growth Plus Plan 14 65 years 75 years 20/25 years
21 Insurance Plan Future Generali Select Insurance Plan 7-60 Years 70 Years 20/25 years
22 Money Back Plan MetLife Money Back Plan 13-55 Years 65 years 10 years
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Unit Linked Insurance Plans(ULIP)

A very popular plan in an insurance company’s kitty is a ULIP. ULIP plans give an individual the freedom to explore the capital market for investments while at the same time bestowing the all-too-important risk coverage. At a time when the share market and mutual funds were dominating individual’s investment portfolios, ULIPs were launched by insurance companies to lure customers with the promise of high investment returns. Today, ULIPs have become popular among many investors as these plans provide the dual benefit of insurance cover and wealth maximization. So, let us understand the concept of ULIPs in details.

What is ULIP?

Unit Linked Insurance Plan or ULIP is an insurance product which offers risk coverage to the policy buyer along with introducing the buyer to investment opportunities in the capital market. It provides a platform for the buyer to invest in different types of investment instruments such as stocks, bonds as well as mutual funds. ULIP can be classified as a two-in-one plan which aims at offering investment and protection to investors, which are customised according to individual requirements. As a comprehensive plan, the investment and protection part can be managed according to specific buyer choices and needs.

Types of Investment Funds under ULIP Plans

  • Fixed Interest and Bond Funds: These kind of funds give returns in a timely manner. For Fixed returns, insurance companies invest in debt funds, corporate bonds, government securities, etc. The risk factor in these funds is slightly high than Cash Funds. These funds are a combination of secured and unsecured investments.
  • Cash Funds: Cash funds are considered to be the safest kind of investment. Cash funds are also known as money market funds through which the policyholder receives a set amount of returns upon maturity. These funds fall in the low-risk category.
  • Equity Funds: These funds primarily invest in equities and stocks of companies. Equity funds are considered the riskiest ULIP investment, but they tend to offer the highest rewards. So if you have a high risk taking appetite, you should surely invest in an equity fund.
  • Balanced Funds: One of the most stable and prudent investments, balanced funds vary the amount of investment that goes to different places. With the money paid through premiums, insurers invest in fixed component like corporate bonds and varied components like stock market. Balanced funds hence, fall in the medium-risk category.

ULIP Plans Classified on the Basis of Purpose

  • ULIP for Retirement: This plan requires you to pay the premium during the tenure of your employment. This amount is automatically collected as your corpus and is used to purchase an annuity post your retirement.
  • ULIP for Wealth Collection: People invest in this plan in order to accumulate wealth over a period of time. This is a highly recommended plan for millennials in their late twenties and early thirties, so that they have the flexibility to fund any future financial goal.
  • ULIP for Children Education: Some ULIP plans also support a child’s education. These plans protect your child’s future in any unforeseen situation by pooling in some chunk of money. This ensures that the key events in your child’s life never face a financial crisis.
  • ULIPs for Health Benefits: In addition to the above, certain ULIP plans also assist in providing money in case of medical emergencies.

Types of ULIP Plans – Classification by Death Benefit

There are two types of ULIP plan based on death benefit

  • Types 1 ULIP Plans: Under Type-I ULIP, the nominee gets the higher of Sum Assured or Fund Value as a death benefit to the nominee. However, in case the assured dies in the initial years of the policy, when the fund value is lower than the sum assured, the insurer will pay the agreed sum to the assured’s nominee. But when the fund’s value is more than the sum assured, the death benefit is an accumulated amount in the fund.
  • Types 2 ULIP Plans: The nominee of the policyholder gets the sum of both i.e. Sum Assured and Fund Value in the event of demise of the policyholder. Usually, the insurance company charges extra for the added risk it assumes under the type II policy, from the policyholder.

Benefits of ULIP

  • Flexibility: ULIPs offer flexibility in the following ways:
    • It allows the investor to switch between funds and match his funding needs.
    • It allows the investor to make partial withdrawals; however, it may attract charges and is subject to certain terms and conditions.
    • It allows the investors to make single additions to their premiums and increase their investments at any point of time, through the facility of top-ups.
  • Transparent Structure: ULIPs allow you to keep track of your investment portfolio. They also intimate you of the percentage of premium that is invested along with the charges levied regularly. As an investor, you are also kept informed about the value and number of fund units that you hold.
  • Fund Option Can be Chosen: When choosing a Unit Linked Insurance Plan, one can decide the various fund options, based on the risk taking appetite. In case you wish to gain higher returns and have the capacity to take higher risks for the same, you can choose to invest in an equity fund. Hence, if you win, you earn big. However, if you wish to take lesser risk and are satisfied with medium to low, you can choose to invest in a debt fund. ULIPs also provide hybrid funds which suit an individual investor’s needs.
  • Rider Options for Additional Coverage: Along with investment benefits, ULIPs also provide rider options for additional coverage to take care of your loved ones. With rider options such as accidental death rider, critical illness rider and term rider, you can rest assured that ULIPs not only take care of your insurance needs but are also beneficial for your family.
  • Tax Benefit: As ULIPs are life insurance products, they offer tax benefit in the form of tax-free maturity benefits and also on the death benefit and premiums paid.

How does a Unit Linked Plan work?

Here’s how a Unit Linked Plan works. You pay the premium in a ULIP. Alongside, there are several other investors who pay the premium and invest in the same portfolio. The insurer further pools this money, deducts the expenses, and invests the balance money depending on the type of funds chosen. These funds can be invested in either equity, debt or balanced funds.
This total corpus is further divided into units with a certain face value. The insurer allocates ‘Units’ to each investor in proportion to the invested money. This units value is termed as ‘NAV’ or Net Asset Value. Every insurer has a fund manager to keep a track of the invested funds. Based on market performance, the units NAV either increase or decrease, resulting in a higher or a lower NAV.
On the maturity of the ULIP, the insurer pays you the fund value depending on the market value. In case of any unforeseen situation like death, the insurer pays your nominee the higher of the sum assured or the available fund value.

Best ULIPs in India in 2018

While there are several ULIPs available in the market, certain plans stand out because of the benefits they provide for insurance and investment purposes. A few of them are

HDFC Life Click2Invest 0 to 65 years Rs. 1000 to 24000 HDFC Click to invest is a non-participating unit linked insurance plan that offers life insurance by HDFC Life. In this policy, the investment risk in investment portfolio is borne by the policyholder. The benefit of investing in this plan is that you get to choose from almost 8 fund options, have multiple premium payment options and the flexibility to choose your policy term.
Bajaj Allianz Future Gain 1yr to 60 years Rs. 2500 to 25000 Bajaj Allianz Future gain is a ULIP that helps you achieve your life goals by gaining maximum benefits at a nominal cost. You can choose from 7 funds to invest in and enjoy unlimited free switches between funds to optimise your investment.
ICICI Prudential Life time Classic 0 to 65 years Rs. 30000 to 50000 ICICI Prudential Life time Classic is a non-participating unit linked plan that lets you protect your loved ones by providing a life cover, creating wealth and saving for the future. The plan lets you select between 4 portfolio strategies based on your personal investment needs.
PNB Metlife Smart Platinum 7yrs to 70 years Rs. 30000 to 60000 This is a ULIP that lets you build your investment portfolio with the help 6 different funds. The plan offers coverage till 99 years of age with an option to choose a premium term of 5 years, 10 years of your entire lifespan.
Max Life Fast Track Growth Fund 18yrs to 50 years Rs. 25000 to 100000 With investment flexibility, Max Life Fast Track Growth Fund, aims to provide insurance options with a simple and safe approach to invest with multiple fund options in the market. The plan has 6 fund options, offers withdrawal benefits and tax benefits to the investor.

How to Choose a ULIP?

  • Policy Term Flexibility: Most Unit Linked Insurance Plans are long term and hence have a lock in period. Hence, before you invest, you must ask yourself- how long do you want your money to be invested in a policy? Based on the duration, you can choose from a number of ULIP Plans. Once invested, all ULIP plans have a five year of lock-in period.
  • Investment Flexibility: ULIPs also allow you to choose the investment options before you select a plan. According to your risk bearing capacity, a buyer can choose to invest in equity, debt or a hybrid plan respectively.
  • Based on Personal Investment Goals: Before you wish to invest in a ULIP, it is imperative to define your long term financial goals. More than anything, your long term goals should align with your ULIP investment so that you invest in the correct kind of plan.
  • Compare ULIP Offerings: Choosing the best ULIP plan is easier with the help of comparing tool. Use these platforms to compare different unit linked insurance plans online.

ULIP Riders

The various types of riders offered are as following:

Accidental Death and Permanent Disability Benefit Rider

If the life assured dies due to an accident during the policy duration, the life insurance company pays base plan sum assured plus the rider benefit to the nominee. This rider is basically to provide a supplementary coverage to the life assured’s loved ones. However, an accident may not necessarily result in the death of the victim, but leave the victim permanently disabled due to the loss of hands, legs, or both. This may result in a victim being a handicap or cripple. Consequently, the life assured won’t be able to work, earn money and pay the premium. In such a case, the life assured with an accidental total and permanent disability rider gets the rider cover.

Critical Illness Rider

Critical illnesses like cancer, heart attack, kidney failure, coronary artery bypass, paralysis, etc. are sometimes fatal, leaving the suffer unable to work further. Moreover, the treatment of such an illness is expensive. With a Critical Illness Rider on your side, all these expenses are compensated with a lump sum benefit given by the insurance company. The payout is made when the life assured is first diagnosed with any of the critical illnesses as mentioned in the policy document.

Term Rider

This type of rider offers a lump sum or monthly income to the nominee of the life assured, in case death of the life assured during the term of the policy. This is especially beneficial when the life assured was the only bread earner of the family. Term rider gives a stipulated amount every month to ensure that the assured’s loved ones are taken care of and monthly inflow of income continues to support everyday needs.

Waiver of Premium

Due to death (policyholder and insured are different), accidental permanent disability or critical illness, your earning potential is hampered, and income comes to a standstill. Consequently, you are incapable of paying premiums for the rest of the term. If you stop paying the premium, your policy terminates. Once the policy terminates, one cannot claim, which means there’s no maturity or death benefit. But with the waiver of premium rider, your premiums are waived off in the event of disability or critical illness during the term of your premium. Your policy continues with all benefits intact.


ULIPs vs Mutual Funds

The difference between ULIP and Mutual Funds is displayed below:

Type of product Insurance + Investment. Only Investment(no life coverage)
Tax-savings Premiums paid towards the plan up to Rs.1.5 lakh are eligible for tax deduction under the Section 80(C). The sum assured paid on death or the maturity benefit is also tax-free under the section 10(10D). Only ELSS based investments are eligible for tax deductions up to Rs.1.5 lakh under the Section 80(C).
Investment Part insurance – life cover and part invested in equity, hybrid, debts, bonds, equity, etc. Pure Investment.
Insurance Life cover is provided No Life Cover
Riders Option to get comprehensive and complete protection by adding riders Not Applicable
Returns Chances of moderate to high returns Net Asset Value (NAV) depends on the type of investment funds and on the performance of the market. Chances of high returns. Equity-oriented investment gives high returns. Depends on the allocation of funds and market performance.
Liquidity Need to wait until completion of the lock-in period i.e. 5 years before exit. More liquid, except with ELSS which have a lock-in period of 3 years.
When to consider buying When you want to provide financial security, and at the same time ready to accept investment risk. When you have disposal money and wish to gain high returns.
Tenure Depends on the investor but for good returns on investment – 10 to 15 years. No specified tenure
Ideal Term Long term. Can be short, medium or long term.
Ideal Time to buy Can be bought anytime depending on the requirement and the amount one wishes to save. When one has lesser financial burden and have disposable money.
Switching Options Flexibility in switching fund allocations. No switching option
Lock-in Period 5 years Most of the mutual funds typically do not have any lock-in period, except ELSS which have a lock-in period of 3 years. You can buy and sell mutual funds anytime, closed funds.
Security Investment Risk borne by Investor Investment Risk borne by Investor
Fund Management Charges Higher in the initial years up to 5 years, and later on, 1.35% Charges are 2.5%

Eligibility Criteria and Documents Required for Unit Linked Plan

  • One must meet the entry age criteria as mentioned in the policy wordings before purchase.
  • One cannot extend beyond the maximum age allowed under a ULIP plan. To exit you must be below the maximum age mentioned in the ULIP plan.
  • You must adhere to the plan’s premium payment term and mode.

Documents Required to Buy ULIP

  • Income proof – Salary slips, income tax returns, bank statement, etc.
  • Address proof – Driving License, Aadhar card, Voting card, passport, etc,
  • Id proof – PAN card, Aadhar card, voting card, etc.
  • Age proof – Aadhar card, voting card, passport, driving license, etc.

Why should you buy ULIP?

  • Dual Benefit: A Unit Linked insurance Plan is one of a kind Life Insurance plan where a policyholder has the dual benefit of investment as well as life cover.
  • Systematic Savings: Some people often tend to postpone saving for major future needs like child’s college education, future mortgage payments or even retirement funds. This can be avoided by buying a Unit Linked Plan which ensures that you save systematically for your future needs.
  • Tax Benefits: ULIPs are a superb combination of returns and protection. They offer tax exemption under Section 80C and 10(10D) of the Income Tax Act, 1961.
  • Choose the type of Fund: Not everyone is willing to take a risk with their hard earned money, this is where a ULIP is the best option to choose as a Life cover. Depending on the financial needs and risk appetite a policyholder can choose to invest in cash funds, equity, balanced funds etc.
  • Freedom to switch between Funds: Depending on the constantly changing life situations and financial needs, the risk appetite of a person may also change. ULIP offers the freedom to switch between types of funds in such situations.


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