ULIP Terms You Should Be Familiar With

However, before purchasing a ULIP, you must have coherent knowledge about the various terms involved. Having this knowledge allows you to take an informed decision at the time of policy purchase. Here is a list of certain important terms in ULIPs:

1. Fund Value:

   Fund value denotes the value of investment fund options in terms of units.

2. Sum Assured:

   This is the main fund corpus i.e. the amount of guaranteed fund entitlement (payable to the nominee(s) or to the policy holder).

3. Withdrawal (partial):

   As the name implies, a partial withdrawal is the amount withdrawn by the policy subscriber before the maturity of the policy term.

4. Fund Switch:

   This is a feature of ULIPs that allows the policy holder to switch between various given fund options. The number of free switches is capped at an upper limit that varies from one insurer to another.

5. Top-up Premium:

   The additional amount paid (along with the payable premiums) for addition to the main fund corpus is called top-up premium.

6. Contract:

   This is the policy document to which the policy holder and the insurer are two parties, in mutual agreement.

7. Single-premium contract:

   A ULIP which is made functional by a single, lump-sum payment of the payable premium.

8. Regular- premium contract:

   A ULIP which is made functional by periodic payments towards the policy premium, at a decided frequency.

9. Contract Surrender:

   This means surrendering i.e. irrevocably exiting the contract terms before the maturity of the policy term.

10. Surrender value:

    The amount payable by the policy holder in the event of contract or policy surrender.

11. Maturity benefits:

    The funds that are payable by the insurer in the event of completion of the policy term.

12. Death benefit:

    This is the total fund that is payable by the insurer in the event of the policy holder's demise during term of the policy.

13. Survival benefit:

    The periodic funds that are payable by the insurer during the duration of the policy term, in the mentioned frequencies and conditions.

14. ULIP Charges:

    These are the charges that are levied by the insurer in the form of fund management charges, premium allocation charges, mortality charges, policy administration charges etc.

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ARN: EC/06/2017/9792