U L I P

INTRODUCTION

INSURANCE

LIFE INSURANCE NON-LIFE INSURANCE

TRADITIONAL ULIP

MAIN DIFFERENCE BETWEEN TRADITIONAL

AND ULIP PLANS:
1. RISK ON INVESTMENT
2. PREMIUM AMT
 HISTORY

 ULIP CAME INTO PLAY IN 1960 AND IS POPULAR IN MANY COUNTRIES IN THE
WORLD TODAY.

 IN 1971 THE UNIT TRUST OF INDIA OFFERED THE UNIT LINKED INSURANCE PLAN.
OUT OF INSURANCE PREMIUM A SMALL PART OF CONTRIBUTION WAS UTILIZED
FOR PROVIDING LIFE COVER AND BALANCE INVESTED IN UNITS.

 UNIT LINKED GUIDELINES NOTIFIED BY IRDA ON 21 ST DECEMBER, 2005 IN INDIA.

THE MAIN INTENT OF THE GUIDELINES WAS TO ENSURE THAT THEY LEAD TO
GREATER TRANSPARENCY AND UNDERSTANDING OF THESE PRODUCTS AMONG
THE INSURED, ESPECIALLY SINCE THE INVESTMENT RISK IS BORNE BY THE
POLICYHOLDER.
LET US FIRST TRY AND UNDERSTAND WHAT A ULIP IS

 ULIP: IT IS A MARKET LINKED INVESTMENT WHERE THE PREMIUM PAID IS

INVESTED IN FUNDS
 DIFFERENT OPTIONS ARE AVAILABLE, LIKE 100% EQUITY, BALANCED, DEBT, LIQUID
ETC AND ACCORDING TO THE FUND SELECTED, THE RISKS AND RETURNS VARY.
 THE COSTS ARE UPFRONT AND ARE TRANSPARENT, THE INVESTMENT MADE IS
KNOWN TO THE INVESTOR (AS HE IS THE ONE WHO DECIDES WHERE HIS MONEY
SHOULD BE INVESTED).
 THERE IS A GREATER FLEXIBILITY IN TERMS OF PREMIUM PAYMENTS WHICH
MEANS A PREMIUM HOLIDAY IS POSSIBLE.
 YOU CAN ALSO INVEST SURPLUS MONEY BY WAY OF TOP UPS WHICH WILL
INCREASE YOUR INVESTMENT IN THE FUND AND THEREBY PROVIDE A PUSH TO
RETURNS AS WELL.
 THE HIGHER OF THE SUM ASSURED OR FUND VALUE IS PAID AT THE MATURITY OR
INCASE OF DEATH.
 FEATURES OF ULIP
MAIN FEATURES
LIFE PROTECTION
DISABILITY
CRITICAL ILLNESS
SURGERIES
DEATH DUE TO ACCIDENT

ADDITIONAL FEATURES
INVESTMENT AND SAVINGS
CAPITAL GAINS
MORTALITY CHARGES
FLEXIBILITY
ADJUSTABLE LIFE COVER
INVESTMENT OPTIONS
TRANSPARENCY
OPTIONS TO TAKE ADDITIONAL COVER AGAINST
LIQUIDITY
TAX PLANNING
 ULIP

WHAT IS A UNIT FUND?

THE ALLOCATED (INVESTED) PORTIONS OF THE PREMIUMS AFTER
DEDUCTING FOR ALL THE CHARGES AND PREMIUM FOR RISK COVER UNDER
ALL POLICIES IN A PARTICULAR FUND AS CHOSEN BY THE POLICY HOLDERS
ARE POOLED TOGETHER TO FORM A UNIT FUND.

WHAT IS A UNIT?
IT IS A COMPONENT OF THE FUND IN A UNIT LINKED POLICY.
THE COMMON TYPES OF FUNDS AVAILABLE ALONG
WITH AN INDICATION OF THEIR RISK
CHARACTERISTICS

GENERAL DESCRIPTION NATURE OF INVESTMENTS RISK CATEGORY

EQUITY FUNDS PRIMARILY INVESTED MEDIUM TO

IN COMPANY STOCKS HIGH
WITH THE GENERAL AIM OF
CAPITAL APPRECIATION

INCOME, FIXED INTEREST INVESTED IN MEDIUM

AND BOND FUNDS CORPORATE BONDS,
GOVT SECURITIES
AND OTHER FIXED INCOME
INSTRUMENTS
CASH FUNDS SOMETIMES KNOWN AS LOW
MONEY MARKET FUNDS —
INVESTED IN CASH, BANK
DEPOSITS AND MONEY
MARKET INSTRUMENTS

BALANCED FUNDS COMBINING EQUITY MEDIUM

INVESTMENT WITH FIXED
INTEREST INSTRUMENTS
 ULIP

THERE ARE SEVERAL OPTIONS WITHIN A ULIP. YOU CAN

SELECT THE OPTION THAT BEST FITS IN WITH YOUR RISK
PROFILE AND HELPS YOU ACHIEVE YOUR INVESTMENT
OBJECTIVE.

IF YOU ARE AN AGGRESSIVE INVESTOR YOU CAN GO FOR A

ULIP WITH THE MAXIMUM EQUITY ALLOCATION - THIS VARIES
FROM INSURER TO INSURER BUT IS USUALLY IN THE RANGE
OF 70 PER CENT-100 PER CENT OF ASSETS.

IF YOU ARE A CONSERVATIVE INVESTOR THEN YOU CAN OPT

FOR A ULIP OPTION THAT HAS A SMALLER EQUITY
ALLOCATION OF ABOUT 20 PER CENT.
 UNIT LINK INSURANCE PLANS

Investment Risk Asset Allocation * Min. Max.

Fund Profile
Option
Assure Very Low Debt Instruments, Money Market & Cash 100% 100%
Equities & Equity Related Securities 0% 0%
Protector Low Debt Instruments, Money Market & Cash 90% 100%
Equities & Equity Related Securities 0% 10%
Builder Low Debt Instruments, Money Market & Cash 80% 90%
Equities & Equity Related Securities 10% 20%
Enhancer Medium Debt Instruments, Money Market & Cash 65% 80%
Equities & Equity Related Securities 20% 35%
Creator Medium Debt Instruments, Money Market & Cash 50% 70%
Equities & Equity Related Securities 30% 50%
Magnifier High Debt Instruments, Money Market & Cash 10% 50%
Equities & Equity Related Securities 50% 90%
Maximiser High Debt Instruments, Money Market & Cash 0% 20%
Equities & Equity Related Securities 80% 100%
 NAV (NET ASSET VALUE)

THE INVESTMENT IS DENOTED AS UNITS AND

IS REPRESENTED BY THE VALUE THAT IT HAS
ATTAINED AT THAT POINT OF TIME .THIS IS
KNOWN AS NET ASSET VALUE (NAV).
FOR EXAMPLE : AN INVESTOR HAD INVESTED
RS.10,000/- IN A UNIT LINKED PLAN AND THE
NAV AT THE TIME OF INVESTMENT WAS RS.10/-
THEN THE NUMBER OF UNITS HELD BY THE
INVESTOR WILL BE
= 10,000/10
=1000 UNITS
 NAV (NET ASSET VALUE)

THE BASIS USED FOR CALCULATION OF NAV WOULD BE THE

APPROPRIATION PRICE AND EXPROPRIATION PRICE.

THE APPROPRIATION PRICE SHALL APPLY IN A SITUATION WHEN

THE COMPANY IS REQUIRED TO PURCHASE THE ASSETS TO
ALLOCATE THE UNITS AT THE VALUATION DATE

THE EXPROPRIATION PRICE SHALL APPLY IN A SITUATION WHEN

THE COMPANY IS REQUIRED TO SELL ASSETS TO REDEEM THE
UNITS AT THE VALUATION DATE.
 THE NAV PER UNIT OF EACH INVESTMENT FUND WILL BE CALCULATED AS PER THE
PREVAILING IRDA GUIDELINES MENTIONED BELOW

 WHEN APPROPRIATION PRICE IS APPLIED: THE NAV SHALL BE COMPUTED AS:

(MARKET VALUE OF INVESTMENTS HELD BY THE FUND +
THE EXPENSES INCURRED IN PURCHASE OF THE ASSETS +
VALUE OF ANY CURRENT ASSETS +
ANY ACCRUED INCOME NET OF FUND MANAGEMENT CHARGES (-)
VALUE OF ANY CURRENT LIABILITIES (-)
PROVISIONS, IF ANY)
DIVIDED BY THE NUMBER OF UNITS EXISTING AT VALUATION DATE
(BEFORE ANY NEW UNITS ARE ALLOCATED)
 ULIP

WHEN EXPROPRIATION PRICE IS APPLIED: THE NAV SHALL BE COMPUTED AS:

(MARKET VALUE OF INVESTMENTS HELD BY THE FUND (-)
THE EXPENSES INCURRED IN SALE OF THE ASSETS +
VALUE OF ANY CURRENT ASSETS +
ANY ACCRUED INCOME NET OF FUND MANAGEMENT CHARGES (-)
VALUE OF ANY CURRENT LIABILITIES (-)
PROVISIONS, IF ANY)
DIVIDED BY THE NUMBER OF UNITS EXISTING AT VALUATION DATE
(BEFORE ANY NEW UNITS ARE ALLOCATED)
 BIRLA SUN LIFE INSURANCE GOLD-PLUS II

In this policy the investment risk in investment portfolio is borne by the policyholder.

   

Highlights

Seven Fund Options including a 100% equity option - Maximiser: A wide range of investment funds to choose
from depending on your risk appetite. Also, a golden opportunity to higher your return on investments by investing in
100% equity option - Maximiser.

Manage your investment fund portfolio: Free unlimited switches and premium redirection - The plan allows you to
monitor your investment fund performance and change its portfolio according to your preferences at different stages
through free unlimited switches and premium redirection.

Short pay option-3 pay: Convenient short pay option that allows you to pay your premiums for 3 years only thus
avoiding the hassle of paying regular premiums.

Premium Flexibility: The plan offers the flexibility to reduce your premiums from the 2nd year depending upon your
financial situation.

Liquidity: The plan offers good liquidity through Partial withdrawals and Surrender. After three years there is no
penalty on surrender of policy. Free unlimited partial withdrawals after 3 policy years allowed subject to a
minimum withdrawal amount of Rs. 5000.
 BIRLA SUN LIFE INSURANCE GOLD-PLUS II

Investment Risk Asset Allocation * Min. Max.

Fund Profile
Option
Assure Very Low Debt Instruments, Money Market & Cash 100% 100%
Equities & Equity Related Securities 0% 0%
Protector Low Debt Instruments, Money Market & Cash 90% 100%
Equities & Equity Related Securities 0% 10%
Builder Low Debt Instruments, Money Market & Cash 80% 90%
Equities & Equity Related Securities 10% 20%
Enhancer Medium Debt Instruments, Money Market & Cash 65% 80%
Equities & Equity Related Securities 20% 35%
Creator Medium Debt Instruments, Money Market & Cash 50% 70%
Equities & Equity Related Securities 30% 50%
Magnifier High Debt Instruments, Money Market & Cash 10% 50%
Equities & Equity Related Securities 50% 90%
Maximiser High Debt Instruments, Money Market & Cash 0% 20%
Equities & Equity Related Securities 80% 100%
 BIRLA SUN LIFE INSURANCE GOLD-PLUS II

Partial Withdrawals
You are allowed to make unlimited partial withdrawals after 3 policy years, free of cost. The minimum withdrawal amount is INR 5,000.
The maximum partial withdrawal you can make is the excess, if any, of the fund value over the higher of:

INR 30,000; or
Top-up premiums paid by you during the three years preceding the partial withdrawal
date.

Policy Surrender
The policy can be surrendered any time during the tenure of the policy subject to a surrender charge. The surrender charges
will be zero from the 4th policy year. In case of surrender in the first 3 policy years the benefits will be paid out only after the
3rd policy year. The surrender value as of the date of your surrender remains constant till paid to you.
Policy Loans
We do not offer this facility on this plan.
 ARE INVESTMENT RETURNS GUARANTEED
IN A ULIP?

INVESTMENT RETURNS FROM ULIP MAY NOT BE

GUARANTEED.”

IN UNIT LINKED PRODUCTS, THE INVESTMENT RISK IN

INVESTMENT PORTFOLIO IS BORNE BY THE POLICY
HOLDER”.

DEPENDING UPON THE PERFORMANCE OF THE UNIT LINKED

FUND(S) CHOSEN; THE POLICY HOLDER MAY ACHIEVE GAINS
OR LOSSES.

IT SHOULD ALSO BE NOTED THAT THE PAST RETURNS OF A

FUND ARE NOT NECESSARILY INDICATIVE OF THE FUTURE
PERFORMANCE OF THE FUND.
 BENEFITS

 Free insurance cover: the insurance cover is free; the

policy even provides better returns

 Best solution for children’s education/ future needs:

ULIPs not only help save money systematically for a
particular goal, but also helps protect that goal

 The Mortality charges are lower than traditional policies

 MUTUAL FUNDS V/S ULIP
PARTICULARS MUTUAL FUND
Contribution Purely Voluntary. You need not follow
any discipline in investing. Generally
people do not invest regularly – they
invest when the market is high and want
to disinvest when the market is low.
Switches You can switch anytime from one scheme
to another. These switches are subject to
capital gains tax.
Flexibility SIP Cannot be altered
Portfolio Disclosure Mandatory
Surrender of Policy You can surrender anytime
Life Insurance There is no life insurance cover.
Cover
Tax Benefits Section 80C Tax saving Bonds
Investment in other funds are taxable.
Advise Advisable to make investments for short
term
UNIT LINKED INSURANCE
Compulsory Savings. You save
regularly and invest through the
highs and lows in the market.
You can switch anytime from
one scheme to another. These
switches are tax free.
Premium can be altered
Not mandatory
You can surrender the policy
after 3 years without any
surrender charge.
You have life cover up to 5 times
/ 10 times / 20 times the
committed contribution (subject
to age constraints).
Section 80C Tax Free
Advisable to make investments for
long term 10 yrs and above