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Unit Linked Insurance Plans |
Conventional plans |
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Type
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Description |
Unit Linked Insurance Plans
offered by insurance companies
allow policy holders to direct part
of their premiums into different
types of funds (equity, debt,
money market, hybrid etc.) Here
the risk of investment is borne by
the policyholder. |
Conventional Plans are traditional insurance plans. They usually invest in low risk return options and offer guaranteed maturity proceeds along with declared bonuses. |
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Key Features |
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Flexibility of investment: |
Unit Linked Plans give you flexibility to invest as per your risk profile, financial commitments and convenience. You can choose to invest either in equity, or in debt or in hybrid fund and even change your investment strategy. |
These plans do not allow you to choose investment avenues. Your funds are invested as per the strategy and discretion of the company. |
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Transparency: |
Most Unit Linked Plans allow you to track your portfolio. They also regularly intimate regarding the percentage of the premium that is invested along with the charges levied. You are also kept informed about the value and number of fund units that you hold. |
Your premiums are invested in a
common 'with profits' fund and
therefore you cannot track your
individual portfolio. |
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Maturity benefits payout: |
At the time of maturity you redeem
the units collected at the then
prevailing unit prices. Some plans
also offer you loyalty or additional
units annually or at the time of
maturity. |
At the time of maturity you get the
sum assured plus bonuses, if
applicable in the plan. |
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Partial withdrawal: |
Unit Linked Plans allow you to
make withdrawals from your fund,
provided the fund does not fall
below the minimum fund value
and subject to other conditions. |
Conventional plans do not allow
you to withdraw part of your fund.
Instead, some policies offer you
the facility to take a loan against
your investment. |
| Switching
options: |
Available. You can change your
investment fund decision by
switching between the funds as
being offered by the policy. |
Not available since the the
investment decision is taken by
the insurance company. |
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Charges structure: |
Unit Linked Plans specify the
charges. under various heads. |
These plans do not specify the
charges involved. |
| Single premium
Top-up |
Available. The single premium
top-up facility allows you to invest
an extra amount over and above
your regular premiums in your unit
linked plan. |
The top-up facility is not available. |
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Benefit Snapshot |
- Unit Linked Plans give you
flexibility of investment
- They allow you to track your
portfolio.
- Unit Linked Plans offer the
benefit of a single premium top
up which allows you to invest
ad hoc additional amounts
- Unit Linked Plans allow partial
withdrawals, subject to
conditions and switching
between funds by paying some
charges, if necessary.
- Unit Linked Plans give you the
option of a premium vacation.
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- Conventional plans offer fixed
premiums linked to the sum
assured.
- The maturity benefits for these
plans include the sum assured
plus bonuses, if applicable
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