Unit Linked Insurance Plan FAQ

What is ULIP?

ULIP or unit linked insurance plan is a life insurance plan which has two integral parts- insurance and investment. The individual life is covered as per the cover chosen by him. Additionally, in a ULIP, the premium paid (after charges) is invested in any of the funds available with the insurer.  ULIP’s are market linked and investment risk is borne by the insurer.

What are types of ULIP?

Primarily there are two types of ULIP’s:

Type I ULIP: The death benefit is higher of Sum Assured or Fund value.

Type II ULIP: The death benefit is sum of Sum Assured and Fund value.

Does ULIP offers guaranteed returns?

The returns are not guaranteed in a ULIP. ULIP is market linked and any risks associated with the ULIP are borne by policyholder.

What are charges in a ULIP?

Any ULIP has four major charges: Premium Allocation charges, Fund management charges, Policy Administration charges and mortality charges. Apart from these, there could be charges for switching, premium redirection, partial withdrawal, service requests etc depending on the life insurance plan.

What is Fund in ULIP?

There are different funds available in a ULIP. Different funds invest in different financial instruments such as equity, corporate bonds, Gsec, money market instruments etc. Some funds are more risk prone than others and as such potential for more returns than others.

What is Net Asset Value?

It is the value of each unit of a particular fund. NAV is not same and keeps changing constantly.

What is Fund Switching?

Fund switching facility lets you shift your invested amount from one fund to another.

What is Premium Redirection?

Premium Redirection lets you change the direction and allocation of future premiums towards the funds.

What is Partial Withdrawal?

This facility is available after the lock in period. If some emergency amount is required, you can make partial withdrawal from the fund value.

What is Top-Up?

This is the additional premium which can be added above the usual premium to get more units if you think the particular fund is providing good returns. Top-Up can be made after 1^st policy year and not in last 5 policy years. Top-Up also provides additional life cover.

What is Settlement in ULIP?

In case you do not require fund value on maturity, you can stay invested. The fund value will be paid in installments over the next few years. However the life cover will not continue in the settlement period.

Managing Unit Linked Insurance Plans

Unit linked insurance plan (ULIP’s) are the market linked life insurance plans which invest the premium amount and also provide the individual with life cover. Buying a unit linked insurance plan is the first step. After buying ULIP, there are ways in which you can derive maximum benefit by using the various features available with unit linked insurance plans.

Such features are:

Switching: A ULIP has variety of funds from aggressive equity based fund to conservative debt fund. Suppose you have fund value of Rs 100 which you invested in moderate risk fund. After some time, if you want to transfer Rs 100 to high risk fund, you can do so by using the switch facility. Usually, a limited number of switches are free per year. Switch is not allowed in NAV based plans.

Premium Redirection: At the inception of unit linked insurance policy, you have to choose the fund where your premium will be invested. However you have the option to change the direction of the future premiums into any other fund as well. Suppose you have chosen to invest your premiums in X fund, but you can later change it so that future premiums can be invested in Y or any other fund.

Top Ups: This is the additional lump sum amount which you can add to the policy fund value. Top-Up can be made after 1^st policy year and not in last 5 policy years. Top-up also add life cover. Premium allocation charges can be applied on top-ups depending on the unit linked insurance plan.

Partial Withdrawal: If the unit linked plan is not performing as per your expectations, you can make partial withdrawal and invest in other investment instruments. Partial withdrawals can be made after the lock-in period. Making partial withdrawal is beneficial than cancellation since in former case, policy is active and you have life cover.

Unit Linked Insurance Policy: Need to know

ULIP or unit linked insurance plan are life insurance plans which provide combination of insurance and investment. ULIP’s are long term market linked insurance plans. A ULIP is many things but not a high return low risk short term product.

Here is a list of things which you should know about a ULIP plans:

Long Term Product: In order to sell ULIPs, agents sold it as short term product which doubles your money in 3 to 5 years. However the same is completely untrue. A ULIP is a long term product and should be continued for the entire policy term to reap benefits.

Limited Life Cover: A ULIP usually provided life cover equal to 10 times your annual cover. So if you pay Rs 50,000 as annual premium, you will get only Rs 5 lacs as life cover. So ULIP is no replacement for a pure term plan. A term insurance plan should be bought to secure dependents regardless of life cover provided by ULIP.

Market-Linked: A ULIP is a market linked product and subject to market fluctuations. There is no guarantee in ULIP.  That is why in every ULIP brochure, there is a line “investment risks are borne by policyholder”. The returns will entirely depend on the performance of the market.

Transparent Product: Unlike traditional plans, ULIP are transparent in terms of charges and investment methods. You can choose in which fund you want to invest the money and charges can be seen in the policy document which will be deducted throughout the policy term.

High Charges: A ULIP charges have been always high. A cap on charges by IRDA did reduce charges on a ULIP yet they are expensive if you compare them with other investment tools.

Managing Funds: In a ULIP, you have to manage funds yourself. You have to switch from one fund to another if required or make a premium redirection to change the direction of future premiums to other funds.

Insurer: Bajaj Allianz Life Insurance 

Category: Single Premium Unit Linked Insurance Plan

Objective: Financial protection of family and good return on investment

Option to decrease Sum Assured

Unlimited free switches

Optional Riders

Maximum Entry Age: 65 Years

Minimum Age at Maturity: 18 Years

Maximum Age at Maturity: 75 Years

Policy Term: 10/15/20/25 Years

Premium Paying Term: Single

Minimum Premium: Rs 50,000

In case of death of the life insured, higher of Sum Assured or fund value shall be payable.

Maturity Benefit:

The fund value as on maturity date is paid to the policyholder.

Guaranteed Addition:

A certain % of single premium will be added as follows:

Decrease Sum Assured:

You can decrease Sum Assured if required subject to the minimum cover allowed in the plan.

Riders:

Riders add more financial security to the base plan. The riders available with Flexi Advantage are:

- Accidental Death Benefit Rider

- Accidental Permanent/Total/Partial Disability Rider

- Critical Illness Rider

- Hospital Cash benefit Rider

- Family Income Benefit Rider

- Term Rider

Bajaj Allianz has seven funds available ranging from conservative to aggressive. If you have higher risk appetite and are for long term you can opt for aggressive fund. On the other hand, if you have limited investment period, you should go for conservative Secure Fund.

In a typical scenario, you will be able to get at least 10% return on investment. The investment risk is borne by the policyholder.

Sanjeev aged 30 invests Rs 1 lacs as a single premium. The policy term is 20 years. He opts for insurance cover of Rs 5 lacs.

Assume fund value after four years is Rs 1.3 lacs.

Death Benefit: If Sanjeev passes away after four years, his wife will get fund value.

Maturity Benefit: He gives in total amount of Rs 100,000 to Bajaj Allianz. At maturity, assuming growth of 10% only, fund value would be approximately Rs 427,869. The maturity amount could be more depending on the money market scenario. Longer terms typically provide good returns.

Under Section 10(10D) death claim is completely tax free.

Premium Allocation Charges: These charges are deducted as percentage of premium. Insurer deducts these charges on account of expenses incurred by the company – medical examination, policy issuance, underwriting bills. Premium allocation charge is 10% of the single premium.

Fund Management Charge: These are the charges levied as a percentage of fund value to manage the funds. The premium paid is allocated into different portfolio of funds. The charges are 1.35% for Equity Growth Fund II, Accelerator Mid-Cap Fund II, Pure Stock Fund; 1.25% for Asset Allocation fund, Equity Index Fund II; 0.95% for Bond Fund and Liquid Fund.

Policy Administration Charge: These are monthly deductions by the insurer for maintaining the policy- paperwork, work force etc.  They are recovered through cancellation of units. Flexi Advantage has no administration charges.

Mortality Charge: These are charges deducted as a part of life cover provided and are recovered through cancellation of units.

What else should I know about?

Switch: Switch is made to transfer the fund value from one fund to another. The minimum amount to be switched is Rs 5000. You can make as many switches as you want and are free of cost.

Partial Withdrawal: If policyholder is above 18 years, partial withdrawal can be made subject to minimum of Rs 5,000.

Free Look Period: Flexi Advantage plan can be cancelled within 15 days of receiving the policy contract. A written application can be submitted to any branch for the same. The premium will be paid back minus some charges like stamp duty, medical reports.

How and when to discontinue from Life Insurance?

Life insurance is a complex financial product. More often than not, one gets stuck by buying the wrong insurance policy and seeks a way out. However after buying life insurance policy, it is not easy to discontinue as it is a long term insurance product. There is free look period of 15 days when you can cancel the policy with just few nominal charges which get deducted as a part of medical tests, stamp duty etc.

The following exit strategies are provided based on life insurance products:

Term Plans:

With the onset of many online term plans which are comparatively very cheap, many people want to discontinue their old term plans. However before discontinuing, it would be best to buy the new term plan as the cover should not break and there might be medicals involved which could take time. Once the new policy gets issued, you can cancel the earlier term insurance policy.

ULIPs:

All ULIP’s have lock in period of 5 years. So if you cancel policy within 5 years from the commencement of policy, you will have to wait till the 5^th year to get the fund value. There is no point cancelling unit linked insurance plan within 5 years as the cancelling charges along with other charges will reduce invested amount too much.

Exit a ULIP if you are near to mid policy term, charges are high and fund value is not getting much growth.  If your ULIP is not performing due to higher charges, hold on to them for few more years till the fund value improves. Because most ULIPs charges drop over the policy term and stock markets could also improve in longer duration. Do not cancel ULIP if you are near to maturity as you might get loyalty additions.

If you have taken child plan, make sure there are safeguards for your children when you withdraw from the plan.

Traditional Plans:

These plans are tricky. In traditional plans, you get surrender value after 3 years. The surrender value is equal to higher of special surrender value or guaranteed surrender value. In most traditional plans, the guaranteed surrender value is 30% of all base premiums paid barring first year premium. The special surrender value is declared from insurer from time to time. So if you can cancel traditional plan, you are entitled to higher of the surrender values among the two.

It is best to continue the traditional plan as cancelling traditional plan leads to the good loss of invested amount. If emergency amount is required, you can apply for loans against the policy after ascertaining the interest rate charged from the insurers. Loan facility is available with many insurers.

ULIP’s: Exit from the right door

ULIP’s or unit linked insurance plans are life insurance solutions which are a combination of investment and insurance. ULIP is a complex insurance product. One has to understand the working of ULIP, charges involved, market dynamic to make head and tail of ULIP. The downfall here is that customer gets lured without understanding the dynamics of ULIP on the word of advisor or salesperson. The sales representative who earns a commission out of it assures customer of excellent returns and other features. The end result being you are stuck in a ULIP which drains your hard earned money and does not address your financial needs.

Since you want to get rid of ULIP, here the things to consider before taking abrupt decision:

Before 5 Years:

There are quite heavy front end charges in ULIP as well as cancellation charges which makes surrendering ULIP before 5 years a loss proposition. Also returns depend on equity market where you need to stay invested long term to derive maximum benefits. The new ULIP plans have lock in period of 5 years so if you surrender policy, the surrender amount will only be paid after 5 years from inception of the policy.

After 5 Years:

After 5 years, there are no cancellation charges. When you apply for cancellation, you would get the money within few days. If the fund value is good, you can withdraw amount or remain invested. If fund value is not as per your expectations, you can wait till the fund value improves. You can also make partial withdrawal and invest in some other financial instruments. Do remember as long as you remain invested, you also have life insurance cover too. Also there are loyalty additions in many ULIP’s which get added to the fund value.

Exit from ULIP if:

- Charges are higher even in later years

- Funds are not performing compared to competitors offering

Stay with ULIP if:

- Market is down since you will be able to get cheaper units (regular premium policy) and reap benefits when markets improve

- You are in the initial 5 years as you can end up losing majority of investment

- You have invested in Guaranteed NAV since the guarantee is bound to complete policy term and any premature cancellation will void the guarantee

- You are close to maturity as costs are less and you also might get loyalty additions

Also before cancelling ULIP, ensure you have a life cover from other life insurance policy.

Unit Linked Insurance Plan- ULIP  

Unit Linked Insurance Plan (ULIP) are the market linked insurance plan which also provide life cover. In an ULIP, the premium amount (after deduction of charges) is invested into different funds. The fund could be equity based, debt based etc. The performance of the fund will depend on the market. A growing upward trend in market will increase the fund value.

What ULIP is not?

A short term high return low risk product.

What is ULIP?

It is a long term investment product with combination of insurance and investment. Every unit linked insurance policy has risk and that’s why it is called market linked. In a ULIP, the investment risk is borne by the policyholder.

Depending on the death benefit, ULIP’s are categorized into two broad categories:

Type I ULIP: The death benefit is equal to higher of Sum Assured or fund value.

Type II ULIP: The death benefit is equal to both Sum Assured and fund value.

Depending on the objective, ULIP are divided into the following categories:

Wealth Plan: These plans are usually of shorter time frame around 10-15 years and focus on getting higher returns to create a good maturity amount.

Child Plan: These plans are for securing child’s financial future. The money is invested to ensure that the child’s future financial goals like education are secured. Along with it, death benefit in most child plan is very comprehensive so that child’s future is not compromised.

Pension Plan: These plans focus on creating a corpus amount so that life insured gets regular pension after retirement.

Compare ULIP plans now!

How does ULIP work? Why initially fund value is lower than invested amount?

It should be absolutely clear that Unit linked insurance policy is not a pure investment product but a combination of insurance and investment.

Often when you check the fund value, you observe that the fund value is less than the amount invested by you. It is expected.

The reason depends on the working of ULIP. Here’s how ULIP works.

Unit linked insurance policy has two parts- life cover and investment. That is you get life cover and your money is invested into different financial instruments to provide returns on investment.

The premium paid by you is not the amount that gets invested. There are some front charges and other charges. The following charges get deducted, some initially and some during the policy term.

Premium Allocation Charges: These are deducted from the premium amount paid.

Policy Administration Charges: These charges are for policy maintenance and deducted from units in the policy.

Fund Management Charges: For managing the fund, these charges are also deducted from the units.

Cost of Guarantee: In ULIP which offer minimum guaranteed amount or NAV, there is cost of guarantee which is deducted from the total units.

Mortality Charges: These charges are for the life cover and deducted from total units in the policy.

After the charges are deducted, the premium will be used to buy fund units. The returns will depend on the performance of chosen fund.

Example: Suppose you pay Rs 30,000 annual premium. After charges are deducted say Rs 5,000, the amount left would be Rs 25,000. Now suppose a fund XYZ has NAV of Rs 10. So you will get 25,000/10= 2500 units of the fund. Depending on the market performance, if fund NAV increases it will reflect on your fund. If after 9 months, the NAV increases to Rs 11, then your fund value will 2500 units x Rs 11= Rs 27,500. This amount is lower than Rs 30,000 which was invested. If NAV has fallen, then the fund value would have been lesser.

So when you invest in a unit linked insurance policy, be ready to stay with the policy for as long as possible. The returns increase if the policyholder stays invested for longer term because of decrease in charges and market averages itself if time frame is longer.

Should I invest in ULIP?

You should invest in ULIP if you are comfortable with the notion of taking risks on the equity, debt market etc. ULIP’s are transparent and flexible. Unlike traditional plans wherein you have no clear information on how the amount is getting invested, ULIP’s are very clear on the same. Also since ULIP is market linked, the growth could be much more.

You have to regularly monitor the fund and switch to other funds if required. Many new ULIP products have automatic investment allocation which automatically transfers the amount from risky to secure fund once the objective return is realized.

You should invest in ULIP if you are willing to take market associated risk. Also it is not advisable to buy ULIP at later stage as mortality charges are high when you are above 50.

How risk prone is ULIP? Can I lose all my money?

ULIP is as risky as the market performance. Suppose your money is invested in equity based fund; when the markets tumble the fund NAV will suffer too. On the other hand, if market shoots up, your NAV will increase resulting in good returns. The best possible method is to continue the ULIP for entire policy term because even if you suffer a setback because of fall in market, there is sufficient time to recover from them and make profit as well.

What are the things to consider before buying an ULIP?

Buying a Unit linked insurance policy could be tricky. There are many things you should consider before buying ULIP which are listed below:

Investment Option: ULIPs allow to self manage the investment by choosing among the different funds available. ULIP’s also have different investment strategies which transfer the funds from equity to debt once the return objective is realized or you are close to end of policy term. Before buying ULIP, check out the investment options available.

Charges: IRDA put a cap on ULIP charges. Since then insurers are introducing ULIP with very low charges. Many zero allocation charge ULIP’s have been launched. However do not be misled by marketing gimmicks. Many ULIPs have zero allocation charges in the plan but also no loyalty additions. Also such plans have charges for switches, premium re-direction and partial withdrawal facility.

Loyalty Additions: ULIP have loyalty additions which are added to fund value and help in increasing overall maturity fund value.

Features: These could be limited premium term, single premium options, flexible Sum Assured, premium payment modes available, revival conditions etc which should be checked in ULIP. You might feel the need for decreasing Sum Assured at later stage and if there is no such option; you will be stuck with it.

Riders: Riders make an essential part of life insurance plan. They carry nominal cost but are very useful since they pay additional amount on the occurrence of events like accidental death, critical illness etc.

How to discontinue the ULIP?

Before 5 years: There is lock in period of 5 years in a ULIP. That is if you cancel ULIP, the amount will be provided to you only after 5 years from date of commencement of life insurance policy. If you cancel ULIP within 5 years, then the fund value will be shifted to discontinued fund which will grow at 3.5% compounded annually. After 5 years, the fund value will be provided to you.

After 5 years: You can withdraw complete amount after 5 policy years.

Buy new ULIP or revive old policy?

Because of miss-selling and other reasons, many customers end up not continuing premium and hence the policy lapses. Before going for a new ULIP, consider reviving the old policy. It is possible that major charges have already been deducted in the lapsed policy and reviving the policy could be more beneficial. At the same time, new ULIP policies have cap on charges and are also available online and as such are quite cost effective.

Best ULIP Plan

A best ULIP plan should not only be the one which provides comprehensive cover but also good returns. There is tight competition among the insurers and as such new ULIP’s launched carry lower charges than the earlier ULIP’s. If the charges are low, more amount will be invested and therefore more returns.

Furthermore, a best ULIP depends upon your requirement. If you require a comprehensive death cover, go for a Type II ULIP where death benefit is equal to total of fund value and Sum Assured. Add riders to increase financial security.

For a person looking for higher returns, best ULIP would be Type I ULIP which has less comprehensive death cover and hence less charges relatively.

Comparing ULIP Online

There are many unit linked insurance policies in the market each promoting its features- some have no allocation charges, some have loyalty additions, some allow you flexible Sum Assured etc. It is hard for customer to choose after being presented with so many ULIP’s. Instead of relying on agents or sales executive (commission biased), you should go online and compare the different ULIP’s online. You will end up saving money and also get the features which you need rather than the features that lure.

Insurers also have many ULIP’s which you can buy online.

Compare ULIP plans now!

Insurer: Sahara Life Insurance

Category: Unit Linked Insurance Plan

Objective: Financial protection of family and good return on investment

Maximum Entry Age: 55 Years

Maximum Age at Maturity: 70 Years

Policy Term: 10, 15, 20 Years

Premium Paying Term: Policy Term, Single Premium

Minimum Premium: Rs 15,000 (Annual Mode), Rs 45,000 (Single Premium)

Premium Payment Frequency: Yearly, Half Yearly

Returns in Sahara Shikhar

Any ULIP’s performance is directly dependent on the performance of the fund which in turn depends upon equity and debt market. If the market is rising, it will automatically reflect on your returns.

Sahara has 5 funds available ranging from conservative to aggressive. If you have higher risk appetite and are for long term you can opt for aggressive fund. On the other hand, if you have limited investment period, you should go for conservative fund.

In a typical scenario, you will be able to get at least 10% return on investment. The investment risk is borne by the policyholder.

Premium Allocation Charges: These charges are deducted as percentage of premium. Insurer deducts these charges on account of expenses incurred by the company – medical examination, policy issuance, underwriting bills. Premium allocation charge varies from 7.5% to 5% of annual premium over the policy term.

Fund Management Charge: Charge ranging from 0.65% to 1.00% is deducted from the units for fund management.

Policy Administration Charge: These are monthly deductions which start from first month and are for maintaining the policy- paperwork, work force etc.  The monthly policy administration charge is Rs 30 per month and increases at 5% per annum thereafter.

Mortality Charge: These are charges deducted as a part of life cover provided and are recovered through cancellation of units.

Under Section 10(10D) death claim is completely tax free.

Partial Withdrawal: If policyholder is above 18 years partial withdrawal can be made and the minimum partial withdrawal amount is Rs 2,500. There is no charge for partial withdrawal.

Grace period: Shikhar can be renewed within 30 days from the premium due date.

What to do?

To Cancel Policy: Shikhar plan can be cancelled within 15 days of receiving the policy contract. A written application can be submitted to any branch for the same. The premium will be paid back minus some charges like stamp duty, medical reports.

If you want to cancel policy after the initial period of 15 days, you can do it but the amount will be paid only after lock in period years. If you cancel policy within 5 years from inception, the amount will grow at interest rate of 3.5% compounded annually. After five years, if you cancel the policy, there will be no cancellation charges and amount will be paid immediately.

Insurer: Shriram Life Insurance

Category: Unit Linked Insurance Plan

Objective: Financial protection of family and good return on investment

Maximum Entry Age: 65 Years

Maximum Age at Maturity: 75 Years

Policy Term: 10 Years, 15 Years to 25 Years

Premium Paying Term: 5/10/15/20 Years, Policy Term

Minimum Premium: Rs 12,000

Premium Payment Frequency: Yearly, Half Yearly, Quarterly, Monthly

Returns in Shriram Wealth Plus

Any ULIP’s performance is directly dependent on the performance of the fund which in turn depends upon equity and debt market. If the market is rising, it will automatically reflect on your returns.

Shriram Wealth Plus has six funds available ranging from conservative to aggressive. If you have higher risk appetite and are for long term you can opt for aggressive fund. On the other hand, if you have limited investment period, you should go for conservative fund.

In a typical scenario, you will be able to get at least 10% return on investment. The investment risk is borne by the policyholder.

Premium Allocation Charges: These charges are deducted as percentage of premium. Insurer deducts these charges on account of expenses incurred by the company – medical examination, policy issuance, underwriting bills. Premium allocation charges depend upon the premium amount and vary from 3.5% to 7.5% over the policy term.

Fund Management Charge: The annual fund management charge is 1.25% for Preserver and Defender fund while it is 1.35% for rest of the funds.

Policy Administration Charge: These are monthly deductions which start from first month and are for maintaining the policy- paperwork, work force etc.  The administration charge is Rs 10 per month for first 5 years and Rs 20 thereafter increasing by 4% thereafter.

Mortality Charge: These are charges deducted as a part of life cover provided and are recovered through cancellation of units.

Under Section 10(10D) death claim is completely tax free.

Switch: You can choose to switch the fund value from one fund to another as per your preference. There are 2 free switches in a policy year.

Partial Withdrawal: If policyholder is above 18 years, he can make partial withdrawal subject to minimum withdrawal amount of Rs 10,000. Foe every partial withdrawal made, Rs 100 will be charged.

Grace period: Wealth Plus can be renewed within 30 days from the premium due date.

What to do?

To Cancel Policy: Wealth Plus plan can be cancelled within 15 days of receiving the policy contract. A written application can be submitted to any branch for the same. The premium will be paid back minus some charges like stamp duty, medical reports.

If you want to cancel policy after the initial period of 15 days, you can do it but the amount will be paid only after lock in period years. If you cancel policy within 5 years from inception, the amount will grow at interest rate of 3.5% compounded annually. After five years, if you cancel the policy, there will be no cancellation charges and amount will be paid immediately.

Insurer: Shriram Life Insurance

Category: Unit Linked Insurance Plan

Objective: Financial protection of family and good return on investment

Maximum Entry Age: 65 Years

Maximum Age at Maturity: 75 Years

Policy Term: 10/15/20 Years

Premium Paying Term: Single Premium

Minimum Premium: Rs 25,000

Returns in Shriram Fortune Builder

Any ULIP’s performance is directly dependent on the performance of the fund which in turn depends upon equity and debt market. If the market is rising, it will automatically reflect on your returns.

Shriram Fortune Builder has six funds available ranging from conservative to aggressive. If you have higher risk appetite and are for long term you can opt for aggressive fund. On the other hand, if you have limited investment period, you should go for conservative fund.

In a typical scenario, you will be able to get at least 10% return on investment. The investment risk is borne by the policyholder.

Premium Allocation Charges: These charges are deducted as percentage of premium. Insurer deducts these charges on account of expenses incurred by the company – medical examination, policy issuance, underwriting bills. Premium allocation charge is 5% of the single premium amount.

Fund Management Charge: The annual fund management charge is 1.25% for Preserver and Defender fund while it is 1.35% for rest of the funds.

Policy Administration Charge: These are monthly deductions which start from first month and are for maintaining the policy- paperwork, work force etc.  The annual administration charge is 1.25% of the single premium for the first 5 policy years and none thereafter.

Mortality Charge: These are charges deducted as a part of life cover provided and are recovered through cancellation of units.

Under Section 10(10D) death claim is completely tax free.

Switch: You can choose to switch the fund value from one fund to another as per your preference. There are 2 free switches in a policy year.

Partial Withdrawal: If policyholder is above 18 years, he can make partial withdrawal subject to minimum withdrawal amount of Rs 10,000. Foe every partial withdrawal made, Rs 100 will be charged.

Grace period: Fortune Builder can be renewed within 30 days from the premium due date.

What to do?

To Cancel Policy: Fortune Builder plan can be cancelled within 15 days of receiving the policy contract. A written application can be submitted to any branch for the same. The premium will be paid back minus some charges like stamp duty, medical reports.

If you want to cancel policy after the initial period of 15 days, you can do it but the amount will be paid only after lock in period years. If you cancel policy within 5 years from inception, the amount will grow at interest rate of 3.5% compounded annually. After five years, if you cancel the policy, there will be no cancellation charges and amount will be paid immediately.