What Are The Different Kinds Of Funds Offered By ULIP?

The United Linked Insurance policy is known as ULIP. This life insurance policy provides insurance as well as risk coverage. The capital market has a direct influence on the performance of the ULIPs. In a ULIP the investment risk is to be borne by the investor. The investment returns are not guaranteed from ULIP. Depending on the performance and the chosen funds the policy holder can achieve loss or gain on the investment. The past returns of the fund in no way indicate the performance of the fund.

The ULIPs come under different charge structures. The insurer has the right to revise the fees and charges over a specific period of time. The different charges under ULIP are:

  • The premium allocation charges
  • The mortality charges
  • The fund management charges
  • The policy or administration charges
  • The surrender charges
  • The fund switching charges
  • The service tax deductions

An ULIP offers different types of funds. These funds are specially made to suit the investment objectives, time horizon and risk profile of the investor. The risk profiles vary according to the funds. The potentials also vary according to funds.

Following are the different kinds of funds offered by ULIP:

  • General Description – Equity Funds
  • Nature of Investments – primarily investment in company stocks with the general aim of capital appreciation.
  • Risk Category – Medium to high.
  • General Description – Income, Fixed Interest and Bond Funds
  • Nature of Investments – Invested in corporate bonds, government securities and other fixed income instruments.
  • Risk Category – Medium.
  • General Description – Cash Funds
  • Nature of Investments – Known as Money Market Funds – invested in cash, bank deposits and money market instruments.
  • Risk Category – Low.
  • General Description – Balanced Funds
  • Nature of Investments – Combining equity investment with fixed interest instrument.
  • Risk Category – Medium.

> What Are The Different Kinds Of Funds Offered By ULIP?
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