The advantage of unit linked Insurance plan is actually an insurance product where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of unit link life insurance and mutual funds. The idea here is that you put in your money and it grows with time. So you also have life cover and money also grows at the same time. You get units like in mutual funds, and the value of these units grows because the company invests it for you. ULIP provides you the option of choosing the investment option as per your risk coverage. These are provided by the insurance companies or even banks. Unit link insurance plan or ULIP is the advance type of insurance plan. When premium is paid, you are given a insurance cover and part of premium is invested in the fund of your choice. In the initial years, a major part of the premium goes towards buying an insurance cover and remaining portion is invested. You can also switch between funds if the market condition or your personal views changes.

 

Features Of Unit Link Insurance Plan

 

Unit link insurance plan is also called as ULIP, unit link insurance plan is the new product offering from insurance companies. A unit link insurance plan has the flexibility of investing its corpus amongst various asset classes viz, debt, equity or a mix of two. This gives you the option of choosing the investment option as per your own risk appetite. So if you are young and have high risk appetite, go for the growth option that invests predominantly in equities or mutual funds. For a middle-aged person having a moderate risk appetite, balanced option that is a combination of debt and equities is advisable. Those who don’t want to take the risk, debt option is the best choice. Like a mutual fund, net asset value of a Unit link insurance plan is declared by the insurance company. But the major drawback is that this plan carries very high charges. Also some agents have misled people by telling them that they have to pay premium only for the first three years..