Ulip: Investment cum Insurance Plan

Investment Tips: Unit Linked Insurance Plan (ULIP) is a life insurance plan that is opted by an individual for the benefits of protecting your shares invested in the stock market. In other ways, they are made to react as normal insurance policies plus mutual funds.When an investor commit in Ulip plan, he invest in specific kind of portfolios that he/she chooses. The insurance policy naturally pays back the investment base on whatever the market return is at the end of the insured period. As a result, Unit Linked Insurance Plan is the best form of risk cover for investment.Some Basic Features of Ulip Plans:

Mutual funds, significantly known as Net Asset Value(NAV), is the unit allotted under Ulip 's scheme.
Investors can invest across types of portfolios similar to mutual funds â€" growth equity, balanced, debt funds, etc.
Investors can make premium payment annually, half yearly, quarterly or monthly. There could be a change in premium through the course of Ulip 's life.
Investments qualify under Section 80C of the Income Tax Act, 1961 of India. Maturity proceeds from Ulip 's are tax free.
There are 10% short term capital gains tax on equity portfolios and no long term capital gain within Ulip. For debt funds, long term capital gains tax is 10% while short term is at the investor's marginal tax rate.
However, it could be quite confusing about the charges that the insurance company charge, therefore, investors should compare them with similar mutual funds to see if charges quoted are reasonable.
Despite of attractive structure and benefits,investors are better off clearly understanding portfolio types offered, performance of fund managers and expenses/fees before investing in Unit Linked Insurance Policy.