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8/8/2019 Final ULIP
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8/8/2019 Final ULIP
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Premium
Sum assured
Term
Maturity
Claim-Maturity benefits and Death
benefits Surrender value
Lapse
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A unitlinkedinsurancepolicyisonein
whichthecustomerisprovided withalifeinsurancecoverandthepremium
paidisinvestedineitherdebtorequityproductsoracombinationofthetwo.
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1.Lifeprotection
2. InvestmentandSavings
Marketlinkedfundbasedonriskprofile
Switchoption
Premiumredirection
Automatictransferplan(ATP)
3. Flexibility
4.Transparency
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5. Extraprotection withriders
Deathduetoaccident
Disability
Criticalillness
6.Liquidity
Duringthetermpartial withdrawals
AtMaturity
7.Taxplanning
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In Indiainvestmentsin ULIParecoveredunderSection 80Cof IT Act.
ThepremiumspaidforULIPsareeligiblefortaxrebatesundersection 80 whichallowsa maximumof Rs.1,00,000premiumspaidfortaxableincomebelow Rs 8,50,000.
Proceedsfrom ULIPsaretax-freeundersection10(10D)unlikethosefromamutualfund whichattractshorttermcapitalgainstax.
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In traditional insurance, all premiums gointo a common fund which is invested at
insurers discretion. No transparency in terms of charges and
invested amount and lower return.
Modern insurance is against all of this.
Premiums are invested in capital marketat the holders discretion and completetransparency in charges and investedamount and category.
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Type I plan - pays the higher of the sum
assured or fund value to the nominees
upon the death of life assured. Type II plan - both the sum assured and
fund value are paid.
TypeII
is better but expensive.
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Covers 2 requirements - insurance andinvestment.
Freedom to choose
where to invest funds.
We can choose to increase our premiumpayments (top up facility).
Switching option is available.
Tax benefits upto Rs 1,00,000(sec 80c). Riders can be attached to the main policy
to provide you added protection.
Cover continuance option available.
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More expensive than other kinds ofinsurance products.
Heavy allocation charges and otheradministrative charges will make theamount available for investmentsignificantly restricted.
Not an attractive investment in the short
term (longer break-even time ). Good knowledge of the financial markets
needed to maximize returns from ULIP byswitching between funds at appropriatetimes.
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Maximiser
Protector Balancer
Preserver
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First-yearcharges
Administrationcharges
Riskcharges Assetmanagementfees
Switchingcharges
Top-ups Surrendervalueofunits
Fundperformance
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Unit-Linked Or With Profits
ULIP vs. Regular Insurance Policy
ULIP vs. Fixed Deposit