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In ULIP Plan, the investment risks in the investment portfolio is borne by the policyholder

ULIP - Unit Linked Insurance Plan

A Unit-Linked Insurance Plan (ULIP) is a type of life insurance policy that offers the added advantage of investment opportunities. ULIPs enable policyholders to invest in various debt and equity funds to build a corpus for their future financial goals. ...Read More


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Everything You Need To Know About ULIPs and ULIP Plans
Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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What are Unit Linked Insurance Plans (ULIP)?

image-star image-star image-star image-star image-star image-star image-cloud image-cloud image-cloud moon What Are Unit Linked Insurance Plans (ULIPs)?

Unit Linked Insurance Plans (ULIPs) are a type of life insurance plan that combines insurance coverage with investment options. ULIPs allow you to invest in a variety of asset classes, such as equity, debt, and money market funds, depending on your risk appetite and investment goals.

ULIPs can be a good option for people who are looking for both insurance coverage and investment growth. However, it is important to remember that ULIPs are not without risk. The value of your investments can go up or down.

There are two components to ULIP Plans:

The insurance component: This part of the premium goes towards providing life insurance coverage. If you pass away during the term of the policy, your beneficiaries will receive a death benefit.

The investment component: This part of the premium is invested in your chosen asset classes. The performance of these investments will determine how much money you have accumulated at the end of the policy term.

The amount of money that goes towards each component will depend on the terms of your ULIP policy. You can usually choose how much of your premium payment you want to allocate to the insurance component and how much you want to allocate to the investment component.

Your finances need different investments

  • Listing Bullet A pure insurance cover only takes care of your family’s needs if you are not around.
  • Listing Bullet Considering today’s inflation you need higher returns for your investments.
  • Listing Bullet It is very important to customise your savings depending on your financial goals.
Your finances need different investments

Which HDFC Life ULIP Plan is ideal for you?

At HDFC Life, we have several ULIP Plan options, so you can find one that best meets your financial needs. Our Top Recommended Solutions Suitable for you

Unit Linked Insurance Plans

Grow your corpus. Reap benefits from the market.

Investment calculator

Calculate your premium and plan your investments.

Use our quick and simple calculator to plan your investments better


ULIPs Simplified

How Savings Plan By HDFC Life Helps You?

Watch Mr. Prasun Gajri, CIO HDFC Life answer all the questions on ULIP.

ULIPs can be really uncomplicated!

Tune in to this video to know all about ULIPs.

How Does A ULIP Plan Work?

How Does A ULIP Plan Work?

The premiums that you pay to purchase and maintain your ULIP is split into two parts. One part is used to provide you with life cover. The rest of the premium amount is invested on your behalf. Our fund managers will help you invest, but the choice of funds is ultimately yours.

Calculating ULIP Returns Using the Power of Compounding


ULIPs help grow your wealth with compound interest. Let’s see how much your money can grow in various scenarios:

Monthly Contribution

Investment Period

Estimated Returns at 4%

Estimated Returns at 8%

INR 1,60,000

10 years

INR 2,30,51,725

INR 2,78,14,199

INR 87,000

15 years

INR 2,09,04,625

INR 2,83,46,806

INR 51,000

20 years

INR 1,82,24,184

INR 2,80,06,322

INR 20,000

30 years

INR 1,34,60,385

INR 2,71,87,970

As we can see from the table above, ULIPs work best when you stay invested for longer. Funds that offer a higher interest rate can boost your corpus, allowing you to build up a significant amount even if you start with a small contribution amount. From this demonstration, we understand the power of compounding and the role ULIP plays in building long-term wealth.

Which Investor Class is Best Suited for Investments in a ULIP plan?

A ULIP is a good investment opportunity for you if you:


Have a Varying Risk Appetite

As an investor, you may not want to take very big risks or play it very safe. ULIPs are ideal for investors who are willing to take some chances. You can opt to invest in a balanced fund that has both equity and debt options. By doing this, you can enjoy high gains from equities while offsetting any losses against steady returns from your debt funds.


Have a Long-Term Financial Goal

Unit-Linked Insurance Plans work best when you stay invested for at least seven years or more. Ideally, investors can use ULIPs to save up for the down payment on a home or even to build a corpus for their child’s higher education or future expenses.


Are a Hands-On Investor

When you invest in a ULIP, you can choose the fund portfolio. If you’ve opted for balanced funds, you may want to move your allotment to include more equity funds when the market is performing well. Conversely, you may want to increase the debt fund allotment if the market is expected to slow down. You can choose how and when you want to switch your funds to maximise returns.

Types of ULIPs

Types of ULIPs based on the fund type

ULIPs are market-linked. But that does not mean the premium amounts are streamlined towards equity investments only. With ULIPs one can choose other financial instruments to invest in. funds they invest in.

Equity ULIPs for high-risk investors

Equity ULIPs

In equity ULIPs, part of the payments is used to purchase equity shares, usually of multiple companies. This direct investment in equity makes it significantly more risky than other ULIPs, as the price fluctuations of the shares can directly impact the investment corpus. However, because of the very same reason, the potential for gains is also higher. Hence, equity ULIPs are ideal for investors with a high risk appetite.

Debt ULIPs for conservative investors

Debt ULIPs

Investments made in debt ULIPs are directed towards debt instruments. This includes debentures, government bonds, corporate bonds, and fixed income bonds. These instruments pose low to moderate risk, making them a safer option. However, the returns from them are also moderate, and generally lesser than that of equity ULIPs.

ULIPS for Balanced & Stable investment option

Balanced funds ULIPs

To balance the risk to reward, some ULIPs offer the option to invest in equity as well as debt instruments. A portion of the fund is allocated to debt instruments with fixed interest rates and the rest is invested in equity. Doing so essentially lowers the overall risk factor of investing in only equity. This stabilizes the fund, resulting in reliable returns.

ULIPS for Safe short-term investment

Liquid funds ULIPs

The credit rating for liquid funds ULIPs investments is often high, making them reliable options. It has a low risk factor and is ideal for investors looking for safer options. This type of ULIP invests the money in highly liquid market instruments such as certificates of deposit (CD) and treasury bills. Liquid funds ULIPs also have a short maturity period of only a few weeks to months. Hence, they are great for short-term goals.

Cash funds ULIPs

Cash funds ULIPs

Cash funds ULIPs invest in monetary funds invested in banks. These instruments are exceptionally low-risk. Consequently, the returns they provide are the least amongst all ULIP types. Investors that are very much risk-averse can choose to opt for cash funds ULIPs.

Types of ULIPs based on the plan structure

ULIPs can also be classified according to the structure of the payments, payouts and the type of goal they are expected to fund.

ULIP premium payment options

Regular v/s single premium ULIPs

A regular premium ULIP requires the policyholder to make regular premium payments until the plan attains maturity. The interval of payment is often flexible. A single premium ULIP requires only a one-time premium payment at the time of purchase of policy.

Returns on your Unit Linked Insurance Plan

Guaranteed v/s non-guaranteed ULIPs

Guaranteed ULIPs are focused on preserving the investor’s wealth while non-guaranteed ULIPs focus on wealth creation. Guaranteed ULIPs tend to provide stable returns over a long time while non-guaranteed ULIPs invest a bigger percentage of the premium into equity markets. Non-guaranteed ULIPs have the potential for higher returns, but come with greater risk.

ULIP for different life stages

ULIPs focused on different life stages

ULIPs also come as life stage-based plans that invest in both equity and debt, as well as progressively add low-risk debt instruments as the investor ages. For younger investors, the plans often begin with more equity instruments to tap into high returns and build wealth. With time the ULIPs aim for stable returns by lowering risk.

Benefits of ULIP Plans

Unit Linked Insurance Plans offer several benefits to its policyholders. Some of the key benefits provided by ULIP are listed below:

Maturity benefits with HDFC Life ULIPS

Maturity benefits

If a policyholder survives beyond the maturity period of the policy, he/she gets the accumulated fund as the maturity/survival benefit from the insurer. The amount paid as maturity benefits is equal to the fund value. The maturity benefits are exempted from tax under Section 10(10D).3

Get Death benefits with HDFC Life ULIPS

Death benefits

In the case of the unforeseen demise of the policyholder during the tenure of the policy, the death benefits are paid to the family member of the policyholder who is registered as the beneficiary. Tax benefits- The amount paid as a premium for ULIP is eligible for a tax deduction for a maximum of 1.5Lakhs during a year under section 80C of the Income Tax Act, 1961. Moreover, the maturity benefits received are exempted from tax under Section 10(10D)3.

ULIPS offer Long-term investment benefits

Long-term investment benefits

The longer the investment time horizon in the market, the more you are insulated from the price fluctuations of the market. Investing in the market for the long term gives higher returns and helps you deal with market volatility. ULIP lets you invest in the market for the long term so that you get high returns on your investments.

Get withdrawal Benefits with ULIPS

Withdrawal benefits

ULIP allows the partial withdrawal of funds to the investors in case of any emergencies. After a fixed time, investors can withdraw funds up to a certain limit to meet their fund requirements arising because of an emergency. 

Infographic Explaining Various Benefits of ULIP Plans Infographic Explaining Various Benefits of ULIP Plans

Role of ULIP in Wealth Creation

ULIPs help you build wealth systematically over a long period. Let’s look at how a ULIP can help in wealth creation:

ULIPs offer flexible investment options

Flexible Investments

ULIPs enable investors to choose where their funds get invested. Apart from the initial allocation, you can switch funds during the investment to make the most of the market changes.

Tax benefits of investing in ULIPs

Tax Benefits

ULIPs provide tax benefits on the investment amount. The tax benefits under Section 80C of the Income Tax Act of 19613 allow you to invest and grow your money while minimising your tax burden.

Diversify your portfolio with ULIPs


When you invest in ULIPs, you gain access to multiple asset classes, allowing you to diversify your portfolio quickly. A diverse portfolio allows long-term wealth creation and profitability, making ULIPs a crucial financial tool.

ULIPS comes with 5 years lock-in-period

Lock-In Period

ULIPs come with a lock-in period of five years, ensuring you grow wealth over a longer time. Long-term investments provide better opportunities for growth and wealth creation.

Features of ULIP Plans

ULIP plans have a list of features that makes them the preferred investment option for the investor. Apart from the several tax benefits and the opportunity to increase your wealth over time, the life cover provided under ULIP plans acts as a safety net for the policyholder. Some of the important features of the ULIP plans are listed below



The flexibility of switching between different funds has to be the key feature provided by the ULIP plans. Based on your financial goals, market situation, and risk-taking ability you can switch between different funds to maximize your returns. Apart from the ability to switch, ULIPs provide the additional feature of partial withdrawals. After the lock-in period, an investor can withdraw a certain amount of money to meet their emergency fund requirements. This feature comes to aid when you are faced with unforeseen circumstances and are in dire need of money.    


Dual benefits

ULIP is a popular choice among investors. What makes it stand apart from the traditional investment avenues is its ability to combine the benefits of insurance and investment. While you are protected by financial security provided under life insurance, you can make high returns by investing in the market. Since the funds are managed by expert fund managers, you are less exposed to the volatility of the market. Moreover, you can decide the kind of investments you wish to make based on how much risk you are willing to take. You can always switch between the funds based on changing scenarios in the market.


Financial security

If you are willing to invest for the long term, ULIP makes a good investment choice. The investment time horizon plays a crucial role in getting high returns. Equities perform well over a long period. If you start early, you have the option of investing in aggressive ULIP plans which invest in the equities and with time you can move to the low-risk debt funds. The funds accumulated over the tenure of the policy can provide financial security post-retirement.

Features of ULIP Plans Features of ULIP Plans

How to Choose the Best ULIP Plan?

ULIP is one of the most sought-after investments options for individuals with a long-term financial plan for growing their wealth and ensuring the financial security of their family in case of untimely death. There are several ULIP products available in the market. Here are some key factors to be kept in mind that would help you choose the best ULIP plan as per your financial disposition and risk appetite.

How to manage ULIP Funds?

You can opt to manage your ULIP in the following ways:

Self- Switching your ULIP


If you’d like to manage the fund yourself, you can opt for self-switching. You can decide to change your premium allocation based on your investment portfolio, risk appetite and future financial goals. Most ULIP providers allow you to make a number of free switches during each policy year.

Opt for Automatic Switching

Automatic Switching

If you aren’t very comfortable managing your investment, you can opt for automatic switching. Here, professional fund managers will make switches based on the parameters you set when you purchase the policy.

Top-up your ULIP Investment

Investment Top-Ups

Another interesting way to increase your ULIP corpus is a top-up investment. Whenever you have additional savings, you can put more money into your ULIP. Ideally, investors choose this when their ULIP is already performing well and they’d like to take advantage of the situation to maximise their returns.

Steps to Buy ULIP Plan Online

Before you buy a ULIP product you must understand the insurance and investment benefits offered by the product. ULIPs can be easily bought online in a hassle-free manner. Listed below are simple steps to be followed to buy ULIPs online.


Visit the official website.


Explore the multiple ULIP products listed on the website and choose the one that aligns with your financial goals.


Select the tenure of the policy and the premium payment amount that suits you the best.


Proceed to the payments section.


Select the mode of payment such as net banking, credit card, debit card, online wallet, etc.


Make the payment and enjoy the benefits of your Unit Linked Insurance Plan.

Types of ULIP Charges

What are the various charges associated with ULIPs?

The charges associated with purchasing a ULIP are as follows:


  • Guaranteed income

    Premium allocation charge is deducted from the premium amount before investing.

  • Option of choosing Deferred Annuity

    Fund management charges are capped at 1.35% by IRDAI, and they are different for every fund.

  • Flexibility to decide the frequency of annuity payments.

    Policy administration charges are payable monthly. The rate can remain fixed or increase at a predetermined rate.

  • Get the return of all premiums paid on death.

    Switching charges may apply when a policyholder switches between fund options.

  • Option of choosing Deferred Annuity

    Mortality charges compensate the provider if the policyholder's calculated life expectancy is not met. They are levied monthly.

  • Get the return of all premiums paid on death.

    Surrender or discontinuation charges are levied for premature encashment of some/all units of the investment.

Why Should I Start Planning My Savings Now?

When it comes to saving and investment, the earlier you start the better. A smart savings plan allows you to put money away for a rainy day while building up a corpus to invest for the future. When you’re young, you have fewer financial liabilities and outgoings, which make it the best time to build up a significant amount. You can then invest your savings in instruments like ULIPs that allow you to grow your wealth for the future. Your savings provide you with peace of mind since you build up an emergency fund and prepare yourself and your families for all future situations.

Things to Avoid When Investing in a ULIP

When selecting a ULIP policy, you must avoid these six mistakes:

ULIPs and tax benefits

Only Thinking About Tax

ULIPs offer tax benefits under Section 80C and Section 10(10D) of the Income Tax Act. Many young policyholders select a plan simply because of these benefits. However, ULIPs only offer these benefits if you stay invested for at least five years. Additionally, choosing a policy based on tax benefits might not help you meet your future financial goals.

Evaluate your financial obligations

Opting for Low Life Coverage

Investors opt for ULIPs since they also provide life insurance coverage. While choosing your ULIP insurance, carefully evaluate your current and future financial obligations. Select a sum assured amount based on your current income and debts. You want the sum assured payout to help your family replace your lost income or pay for expenses if anything happens to you during the policy tenure.

Diversify your Investment portfolio

Putting All Your Eggs in One Basket

Some policyholders invest only in equities or one type of fund, hoping for good growth in the long run. However, market-linked returns can be volatile, so it’s best to diversify your portfolio and select funds based on your market knowledge and future financial goals. Choosing a mix of debt and equity options is often prudent.

Avoid missing the premium payments

Missing Premium Payments

Missing a ULIP payment could lead to a penalty and the risk of losing your insurance coverage. If you let the plan become inactive, you might not be able to fulfil your future financial goals.

Provide truthful information

Hiding Crucial Information

Since ULIPs offer life insurance, you must provide details about your lifestyle and medical history in your application form. Not providing truthful answers could lead to your policy getting cancelled later and your nominee’s claim request getting rejected.

ULIP charges

Not Checking the Charges

ULIPs come with premium allocation, fund management, and mortality charges. Before you purchase a ULIP, ensure you check the fees of each plan and select one that helps you fulfil your goals without pinching your pocket.

Which HDFC Life ULIP Plan Is Ideal for You?

At HDFC Life, we have several ULIP options, so you can find one that best meets your financial needs. Let’s help you choose the best plan:

ULIP Buying Guide

1 How Will A ULIP From HDFC Life Help Me?

When you opt to purchase a ULIP from HDFC Life, you’re securing not just your financial future but your family’s future as well. Apart from providing life cover, these plans also allow you to choose how to invest your money. You can opt to invest in different funds that invests in equity or debt funds or a mix of both based on your risk appetite.

2 Who Should Buy a ULIP Plan?

A ULIP can be a great addition to a portfolio. However, whether or not one should buy a ULIP depends on the investor themselves and their requirements. One can opt for a ULIP if one has:


1. Difficulty managing multiple investments directed towards different goals


To build an effective savings plan, it is important to invest in the right instruments and mutual funds across multiple asset classes. This holds especially true while investing in stocks and mutual funds because if a stock crashes or a certain fund underperforms for a while, the capital invested should not be lost. The idea essentially is to not keep all the eggs in one basket. An investment portfolio with diverse instruments is protected against any unprecedented market action resulting in unfavourable price action.


Finding the right mutual fund is not an easy task. Investors, especially beginners, may overlook some aspects of a scheme, such as performance history and risk-adjusted returns.

Moreover, mutual funds do not come with lock-in periods which eliminates the need to commit regular payments. This often results in a premature exit from the investment to channel funds for immediate and less important requirements. It is not conducive for long-term goals which require a more disciplined approach.


Keeping track of all investments over the years, including keeping the life insurance cover and charges in perspective, can prove to be difficult. ULIPs provide the benefit of investing in a diverse mix of instruments while providing life cover.


A ULIP offers more features than a standard life insurance policy. Most people have a protection plan in place, such as an insurance term plan, to insure themselves and their families. However, the benefit received from life insurance may come at a time where the long-term goals of the family are much later in the future. In such a case, the onus to manage the sum rests on the family. ULIPs offer a 'waiver of premium' feature that helps the policyholder ensure that their family receives funds at the time of a major financial requirement such as at the time of college admissions, or weddings. ULIPs with annuity plans


2. Long-term goals to finance


ULIPs generally have a lock-in period of 5 years. After these 5 years, the various charges associated with the policy are amortized. This means that the charges are capped at a lower percentage. Charges associated with ULIPs with a maturity period of 10 years or less are capped at 3%. In case of ULIPs with a term of more than 10 years, total charges are capped at 2.25%. Out of this, the fund management charges are capped at only 1.35%. This encourages investments for a longer term.


Either way, ULIPs generate the most value in long-term, over 15 to 20 years. This is due to the power of compound interest at play, with the aim of capital appreciation over a long period of time. By holding a ULIP, investors can save regularly towards future financial goals such as children’s education, their wedding, purchase of a new home, or retirement income. There is also the option for partial withdrawal if there is an important and absolute requirement, making ULIP a safebox for the investor’s wealth.


Moreover, ULIPs may come with the option of top-up premiums. These additional investments have charges of only 1-2%, which is lower than the charges levied on regular premiums payments. This would mean that top-ups allow for holding more units for lesser investment, effectively decreasing the average cost of ownership of each unit. Investing more in the same ULIP minimizes the charges associated with a new policy. Top-up payments also increase the insurance cover, hence providing an added benefit for investing more.

3 Why You Might Like To Combine Insurance And Investment In A ULIP?

After you have taken care of all your regular family expenses, you save the balance for the future needs of the family . In other words, your family is dependent on you for their present as well as future needs. So, if something were to happen to you, there is a high likelihood of your family's dreams being thrown into disarray. But, don't worry! Marrying your investment and insurnace with these investment plans could help you secure the present and future of your family.


Even the best investments will not help on premature demise


Every investment that you make today is targeted to cater to a future goal. Ideally, you expect that once your investments mature they would help you meet your future goals. But till the time the investments mature and help the family achieve its goals there is always an element of risk.


Should something happen to you midway, this investment could very well be liquidated and prematurely withdrawn to fulfil the family's current needs. Even the corpus left after the partial liquidation will not suffice to meet the family's goals, be it child's higher education or spouse's retirement.


Insurance provides perfect support when you need it most


The risk to financial security of your family is much higher during the first half of your work life. Be it goals, such as your child's higher education or wedding, or, your own retirement, your savings remain very low in the initial phase.

For instance, if you are targeting to save Rs 50 lakh for your child's higher education 20 years down the line, and your investment earns a post-tax annual return of 8%, then you would need to save Rs 8,793 per month to achieve your goal.


But you will be able to accumulate only Rs 6.45 lakh in the first 5 years and Rs 15.93 lakh in the first 10 years, surely the sum that will not help your child fulfill her need for higher education.


It is in situations such as these that the life insurance coverage comes to the rescue and ensures that your family is able to fulfil the desired goals even in the event of your untimely demise.


Life cover fills the gap between the haves and the desired


During the course of your work life, your income will help you accumulate various assets, such as household appliances, gadgets, land, residential property, gold and deposits.


Over a period, certain assets will generate enough income to take care of your family's regular expenses. But if you are no longer there, acquiring these assets could remain just a wish, unfulfilled. Here, a life insurance cover could provide that bridge when there aren't many income generating assets available. Also, big-ticket items like car and home are typically bought with the aid of loans.


In the event of your untimely demise, your family would be left with no choice but to sell them off to repay the outstanding loan. This is where unit linked insurance plans (Ulips) from life insurance companies works so well.


They not only protect your family in your absence by covering living expenses but also allow your family members to keep enjoying the car and home bought with loans. Besides providing life cover, Ulips allow you to invest in equities which typically provide high growth during tenures of 10 years or more. The life cover ensures that other high growth investments such as those in equities besides the investment portion of Ulips still keeps growing. What's more, the cost of life insurance is quite low, especially for online plans.


Life insurance helps explore higher risk, higher growth investments


With an adequate life protection to take care of your family, you are better placed to take higher risk for higher reward investments such as equities. This will also help you go a long way in helping you save more in the long-term of 10 years or more.


Clearly, combining insurance with investment by investing in a combo product likes Ulip provides you with more benefits than what meets the eye at the first instance. The key is investing in the right Ulip.*


*Calculations shown in this article are based on assumptions which are mentioned therein and are not related to any product and are just for illustration purpose.

4 3 Ways In Which ULIP Lock-In Period Helps You Invest For Long-Term Goals

Short-term financial emergencies often damage your financial plans for meeting long-term needs. When faced with an emergency, we tend to reach out to investments that can be liquidated easily. That’s where the lock-in periods in investments, such as in unit linked insurance plans (ULIPs), help you stay on course.


1. Ensures goal Protection


Your long-term life goals, such as retirement, need big amounts. As big amounts cannot be saved in a short period, you need long-term regular savings to achieve different goals. That said, you could come across emergencies that will require you to spend significant amount of money. If you have unrestricted access to long-term investments, they could become an easy choice for liquidation, consequently, compromising your long-term goal.


For instance, a premature liquidation of long-term investments, say, your child’s higher education, to meet a medical emergency, will either compromise his education, or, he will have to take an education loan. If you take the EMI payment burden of the education loan, it will hamper your retirement savings.


If your child pays the education loan EMIs, he will save less or nothing for quite some time in his early work life. A lock-in period like the one in ULIPs, ensures that you stick to regular savings in the initial years, stay away from liquidation and successfully save the desired amount for the intended life goal.


2. Provides incentives to stay invested


When you start long-term investments with an ULIP, you would typically earmark it for an important goal such as your child’s higher education or wedding.


These goals are likely to be 10-20 years away. However, during the course of maintaining your regular expenses month-on-month, you might come across occasions when you would suddenly need a significant amount in a short time. It could be something like money to be raised for child’s school admission process.


These can’t be accommodated in your monthly budget or addressed through small savings at hand. If you are not allowed to withdraw money in investments like ULIP in the initial years due to a lock-in, you get to save a significant sum by the end of the mandatory 5 year lock-in period. Your temptation to liquidate a lower savings amount during emergencies will be greater compared to substantial amounts over a longer period. This, in effect, improves the chances of the money growing unhindered over the long term and providing the growth you seek. As for emergencies, you are forced to make provisions for them like an emergency fund which has liquid investments equivalent to 3-6 months of living expenses. In any case, during the emergency, you will need to look elsewhere for money and that’s where investment plans come into picture.


3. Helps ride out short-term turbulence


Equity is considered among the best-performing asset classes in the long-run i.e. 8-10 years or more. But, in the short term, the investments are subject to significant volatility. Individual investors, new to equity investments can get perturbed by the high short-term volatility and some even make premature exits from investments on significant market declines, losing out on long term growth opportunity. However, thanks to the minimum 5 year lock-in in ULIPs, which also help you tap the long-term growth potential of equities, you can’t make a hasty and premature exit. Over time, you get used to the turbulence which settles down to more stable returns in the long term investment plans as the investments cross the 8-10 year mark.


Investors typically prefer the best investment plan where they can access their money during emergencies. Many times, this facility does more harm than good since people end up nullifying their hard work done over time with ill-considered premature exits from long-term investments. Lock-in periods in investments such as ULIPs ensure that you short term emergencies don’t hamper your progress towards cherished goals such as child’s higher education.

Term Related to Unit Linked Insurance Plans

Here are the key ULIP terms that you must be familiar with:

1 Fund Value

The fund value lets you know how much your investment is worth at any given time. You can calculate the amount the multiplying the number of units owned by the Net Asset Value (NAV) or monetary value of each unit.

2 Sum Assured

The sum assured refers to the life insurance payout. The beneficiary receives the sum assured on the policyholder's unfortunate demise during the policy term.

3 Withdrawal (Partial)

ULIPs allow partial withdrawals from the collected corpus in certain circumstances after the lock-in period. The policyholder can withdraw a small amount from the fund to deal with certain financial situations.

4 Fund Switch

A fund switch allows you, the investor, to make changes to your investment allocation as part of your plan. The number of funds allowed per year depends on your policy.

5 Top-Up Premium

A top-up is an additional amount you can pay, over and above the regular premium, to increase the investment in your ULIP.

6 Contract

Your policy document is a contract between you, the policyholder, and your insurance company. You agree to make premium payments, and the insurance company agrees to invest your money and provide life insurance coverage.

7 Single-Premium Contract

Some ULIPs only require one investment at the start, so they are single-premium contracts.

8 Regular-Premium Contract

Most ULIPs require you to make monthly, quarterly, biannual or annual payments towards your plan, making them regular-premium contracts.

9 Contract Surrender

You can give up your ULIP before maturity in contract surrender.

10 Surrender Value

The surrender value refers to the amount the insurance company owes you on contract surrender.

11 Maturity Benefits

Maturity benefits refer to the funds payable to you by your insurance company on maturity.

12 Death Benefit

On the policyholder's unfortunate demise, the beneficiary receives the sum assured, which is the death benefit.

13 Survival Benefit

The survival benefit refers to the periodic benefits the ULIP provides the policyholder while the plan is active.

14 ULIP Charges

Every insurance company levies certain costs on their ULIPs, such as administrative charges, mortality charges, fund allocation charges and more.

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    HDFC Life Income Benefit on Accidental Disability Rider

    UIN: 101B013V03

    Get additional income benefits over and above your Sum Assured in the event of total permanent disability due to an accident.

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    HDFC Life Critical Illness Plus Rider

    UIN: 101B014V02

    We pay a lump sum amount equal to Rider Sum Assured upfront if diagnosed with of any of the specified critical illnesses.

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    HDFC Life Protect Plus Rider

    UIN: 101B016V01

    Get protected with a proportion of Rider Sum Assured in case of accidental death or partial/total disability due to accident or diagnosed with Cancer.

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Ulip Plans - FAQ's

We’ll tell you everything you need to know about ULIPs.

1 What is the full form of ULIP?

ULIP stands for Unit-Linked Insurance Plans. It offers both insurance and investment avenues.

2 What are different types of funds that ULIPs would invest in?

Depending on one's financial goals and risk appetite, investors can choose between equity, debt and/or other instruments to invest in. Funds under ULIP include a number of instruments. The ratio of debt to equity held is different for every fund. A ULIP has multiple such funds to choose from.

3 How much return is guaranteed in ULIPs?

The returns on ULIPs can vary because the investor gets to choose the combination of equity, debt, hybrid funds in their investment. ULIPs with less risk exposure tend to offer lower returns compared to high-risk equity ULIPs.

4 How units are allotted under a ULIP?

Insurance providers collect policyholders’ capital and invest it in funds of their choice. After the amount is invested, the total is divided into 'units' of a specific value. These 'units' are allocated to the investor according to the amount invested by them.

5 How can I track my ULIP’s fund value?

Fund value simply is the net asset value or NAV of a fund on the given day, multiplied by the number of units held by the investor.


For example, if a fund's NAV is ₹ 50 and an investor holds 3000 units of the fund, the fund value for the investor will be ₹ 50 x 3000 = ₹ 1,50,000.


Comparing the initial and current NAV shows a fund’s progress and returns earned.

6 What are the main benefits of ULIP?

The main feature of ULIPs is that they are insurance plans that help build long-term wealth with their market-linked investment options. They offer a high return potential while also providing dual tax benefits, both on premium payments and on payouts/sum received after maturity.


As per Income Tax Act, 1961. Tax benefits are subject to changes in tax law.

7 Can we increase the premiums for a ULIP?

Investors that have been regular in their premium payments can opt for paying ‘top-up’ premiums, which are additional investments towards the plan. Investors can tap into the potential of a ULIP with good performance history and good returns with these extra premiums.

8 Can we purchase a ULIP with only a single payment?

Yes. Policyholders can opt for a single premium ULIP which requires a one-time payment at the time of purchase of the policy, instead of regular premiums. After the maturity period, the policyholder receives the sum assured. Top-up premiums for these ULIPs may not be available during the first 5 years.

9 Can I cancel/surrender my ULIP plan?

Yes, you can. The lock-in period for ULIPs is 5 years. If you plan to cancel/surrender the plan after 5 years, you will get the accumulated funds till the date of surrender. If you surrender before the lock-in period then discontinuance charges will be deducted and the balance amount will be paid to the policyholder after the completion of the 5 years lock-in period.

10 Can we partially withdraw from the ULIP amount?

Most ULIPs have a lock-in period of 5 years after which the policyholder can choose to withdraw a part of their fund, if the need arises. This is done by ‘cancelling’ some of the units held. There is a limit to the amount that can be withdrawn and it may vary across plans.

11 Can we surrender a ULIP at any time?

The entire fund value is paid to the policyholder if a ULIP is surrendered after the 5-year lock-in period. However, the process of surrendering the policy before 5 years is different. The amount will be paid to the policyholder only after the end of 5 years. However, the insurance provider will deduct discontinuance charges from the fund value. The balance is transferred to a Discontinued Policy (DP) fund and a fund management charge of not more than 0.5% is applied. The DP fund will earn interest over time to provide the minimum return guaranteed by the provider.

12 What is the meaning of fund value?

The fund value refers to the total value of the units a policyholder owns. In ULIP, investors can choose from a variety of schemes as per their risk appetite and financial goals. Fund value on a particular day can be calculated by multiplying the Net Asset Value (NAV) of a unit on that day to the number of units owned by a policyholder. 

13 What is the expiry date of the lock-in period?

The time for which a policyholder cannot withdraw or liquidate the accumulated funds is called the lock-in period. In 2010, the Insurance Regulatory and Development Authority of India (IRDAI) extended the lock-in period to five years from three years. 

14 How Can I Reduce Risk on my ULIP Investment?

ULIP plans provide a variety of fund options for an investor to choose from. Ranging from aggressive to conservative ULIP plans, you can choose as per the market scenarios and your risk-taking ability. If you are risk-averse then you can choose conservative ULIP plans that invest in the debt market. 

15 Is interest on ULIP taxable?

Interest earned on ULIPs is exempt from taxes if the annual premium is up to INR 2,50,000 per year. For annual premiums over the amount, the interest will attract Long-Term Capital Gains (LTCG) tax of 10%.


As per Income Tax Act, 1961. Tax benefits are subject to changes in tax law.

16 Is ULIP a good plan?

ULIPs provide both insurance and investment, making them a good financial tool to have in your portfolio. They allow flexible investment and give you control over fund allocation, enabling you to decide how and where money gets invested.

17 What is the difference between ULIP, Mutual Funds and SIP?

A Unit-Linked Insurance Plan is a type of investment plan that also provides an insurance component.


Mutual funds are investments that pool together resources from several investors. They do not have an insurance component.


A SIP or Systematic Investment Plan refers to a method of investment in mutual funds.

18 What happens if I can’t continue ULIPs after five years?

If you discontinue your policy after five years, you will receive the policy's surrender value.

19 What is sum assured in a Unit-Linked Insurance Plan?

The sum assured refers to the life insurance payout the policyholder’s beneficiary receives as the death benefit.

20 Can I withdraw the ULIP after five years?

Yes, ULIPs today have a lock-in period of five years, so policyholders are free to withdraw their ULIP after this time, though it is not encouraged. You can make a partial withdrawal during some financial emergencies as long as the amount you withdraw does not exceed a percentage of the total premiums paid.

21 Can I withdraw the ULIP after three years?

No, you cannot withdraw your ULIP before the five-year lock-in period. If you surrender it after three years, you will not receive any of the funds payable until after the lock-in period ends.

22 Is ULIP tax free after five years?

If you surrender your ULIP after five years, the surrender value does not attract any taxes.

23 Is ULIP tax-free on maturity?

The maturity benefit of a ULIP is tax-free only if the total premiums paid per year do not exceed INR 2,50,000. If the premiums exceed INR 2,50,000, the maturity amount will attract a 10% LTGC tax.

24 What is the average return on ULIPs?

ULIPs are market-linked products, so the returns vary depending on market fluctuations, the plan tenure, and your selected funds. You must decide on the best investment avenues based on previous performance, projected returns, and personal financial goals.

25 Can I surrender my ULIP before five years?

Yes, it is possible to surrender a ULIP before the five-year lock-in period ends, but it is not advisable. You will not receive any payouts until after the lock-in period ends if you surrender your ULIP before five years. Additionally, you could have to pay a surrender fee and tax on the investment amount.

Click here to view the Specimen Policy Document of this plan.

In unit linked policies, the investment risk in the investment portfolio is borne by the policyholder. The Unit Linked Insurance products do not offer any liquidity during the first five years of the contract. The policyholders will not be able to surrender/withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of fifth year.

Unit Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. The name of the company, name of the brand and name of the contract does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your insurance agent or the intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.For Single premium, the special addition is 1% of the Single premium at inception only.

  1. Opt for Settlement Option to receive maturity benefit in periodical installments.

  2. Partial withdrawals can be made from your funds after completion of 5 policy years, provided the Life Assured is atleast 18 years of age.

  3. As per Income Tax Act, 1961. Tax benefits are subject to changes in tax laws.

  4. Additional Sum Assured on accidental death is paid under Extra Life Option.

  5. In your policy documents we give the Critical Illness benefit the unique name of Extra Health Benefit, Accidental Death Benefit is called Extra Life Benefit and Accidental Total & Permanent Disability Benefit is called Extra Disability Benefit.

  6. Death Benefit under the product - Sum Assured less all withdrawals made during the two year period immediately preceding the death of the Life Assured. Unit Fund Value based on the number of units and the Unit Price of the fund is also payable. The Minimum death benefit will be at least 105% of the total premiums paid.

  7. Loyalty additions (as percentage of the average fund value) will be added to the fund value in the form of additional units from the end of 6th policy year onwards, provided all due premiums have been paid. The Loyalty Additions will be added for both Single Pay and Limited Pay policies.

  8. Assured maturity benefit will be paid only on policy maturity provided all due premiums have been paid and will not apply on death or surrender.

  9. Individual death claim settlement ratio by number of policies as per audited annual statistics for FY 2022-23.

  10. Source - Crisil.com.

  11. For Single premium, the special addition is 1% of the Single premium at inception only

  12. Available under Level Cover with Capital Guarantee and Decreasing Cover with Capital Guarantee plan options

ARN - ED/10/23/5200