- sum insured: amount paid to the beneficiary in the event of the death of the policyholder
- fund value: the value of the fund on a particular day is the net asset value on that particular day multiplied by the number of units held
- upon the death of the policyholder
- ulips withdrawal conditions
- what is ulip plan
- why it is preferred to exit ulip after the blocking period ends
- ulip and traditional plans – detailed comparison
unlike traditional policies, ulips offer the double benefit of life and investment insurance. This financial tool uses a certain percentage of the premium paid to provide life insurance coverage and the remaining amount is used to create the investment corpus.
ulips has a five-year lock-in period. ulips offers payments in case of redemption, expiration or premature death of the insured. Let’s look at the two terms associated with ulips to help you better understand its benefits.
what is the sum insured?
The insurer agrees to pay a certain amount to the family of the policyholder in the event of their death during the term of the policy. this amount is known as the sum insured. The insured sum associated with a ulip plan gives the security that at least that sum of money will be paid to the insured’s family in the event of their death during the term of the policy.
what is the value of the fund?
With ulip, the policyholder can choose from a set of funds to invest, based on their appetite for risk and market conditions. the total monetary value of the units owned by the policyholder is called the fund value. You can calculate the value of the fund on a particular day by multiplying the net asset value (NAV) of each unit on that particular day by the number of units held. the background value keeps changing depending on the navigation.
The nav is the unit price of a fund, calculated by deducting the associated liabilities from the fund’s assets.
different payment cases
There are three conditions under which you can receive payment from a ulip plan. the following explains how each option is executed:
In the event of the death of the insured during the term of the policy, the sum insured or the value of the fund, whichever is greater, is paid to his family. therefore, if the fund’s performance has been poor and the value of the fund is less than the sum insured, the sum insured will be paid.
In the event that the policy owner surrenders the policy during the lock-in period, the insurer deducts the applicable charges from the fund value and pays the surrender value after the lock-in period is complete. ulips have a 5-year lock-in period.
If the policyholder surrenders the policy after completing the lock-in period, the insurer pays the value of the fund. the fund value is calculated by multiplying the navigation value (on the particular date) by the number of units held.
when the policy period ends, the value of the fund is paid to the policyholder.
For more information on ulips, please contact an advisor by visiting the hdfc life website.