Understanding the charges associated with a Unit-Linked Insurance Plan (ULIP) is crucial for maximising the potential of your investment. The range of ULIP charges exists simply to keep these plans functioning well. Once you are aware of them, you can better understand the plan and the returns it provides.
Here's a brief guide on key ULIP plan charges.
1. Premium Allocation Charges
They are deducted from the premium before investing in the chosen funds. Premium allocation charges typically cover the costs of policy issuance, distribution, and administration.
These charges reduce the amount available for investment in your ULIP. For instance, if your premium is ₹50,000 and the Premium Allocation Charge is 4%, only ₹48,000 will be invested.
2. Fund Management Charges
They represent the fees for managing the investment portfolio of your ULIP plan. Fund Management Charges are deducted daily before the Net Asset Value (NAV) is declared. These charges reduce the fund's NAV, thus affecting your overall returns. The IRDAI caps these charges at 1.35% per annum.
3. Mortality Charges
They cover the cost of life insurance in your ULIP plan. Mortality charges are based on the sum assured, age, and health of the policyholder. As you age, these charges increase, impacting the fund value.
4. Policy Administration Charges
They represent the monthly fees for maintaining your ULIP, covering tasks such as record-keeping and customer service. Policy Administration charges can accumulate over time. Regular monitoring is essential to manage these charges effectively.
Remember that the upper limits of the charges mentioned above are defined by the guidelines of the IRDAI. You can check your policy details to know more about the specific charges. By understanding these ULIP plan charges, you can better manage your investment and ensure that the ULIP tax benefit and overall returns are maximised.
** Tax exemptions are as per applicable tax laws from time to time.
Disclaimers:
Unit Linked Insurance Products are different from the traditional insurance products and are subject to risk factors. The Premium paid in unit-linked life insurance policies are subject to investment risks associated with capital markets and 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. IndiaFirst Life Insurance Company Limited is only name of the Insurance Company and _________________ (UIN__________) is only the name of the Unit Linked Life Insurance contract and does not in any way indicate the quality of the contract, its future prospects, or returns. Please know the associated risks and the applicable charges from your Insurance Agent or the Intermediary or policy document issued by the Insurance Company. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. For more details on risk factors and terms and conditions, please read the sales brochure carefully before concluding the sale.
IndiaFirst Life Insurance Company Limited, IRDAI Regn No.143, CIN: U66010MH2008PLC183679, Address: 12th & 13th floor, North [C] Wing, Tower 4, Nesco IT Park, Nesco Center, Western Express Highway, Goregaon (East), Mumbai – 400 063. Toll free No – 1800 209 8700. Email Id:customer.first@indiafirstlife.com, Website :www.indiafirstlife.com, Fax No. +91226570600. Trade logo displayed above belongs to our promoter M/s Bank of Baroda and is used by IndiaFirst Life Insurance Co. Ltd. under license. Adv. Ref. No.:_________.
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