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    Question

    All of the following is true regarding ULIPs

    EXCEPT: 
    A Unit Holders can choose between different kinds of funds. Correct Answer Incorrect Answer
    B Life insurers provide Guarantee for all unit values. Correct Answer Incorrect Answer
    C Units may be purchased by payment of single premium or via regular premium payments. Correct Answer Incorrect Answer
    D ULIP policy structure is transparent with regards to insurance expenses components. Correct Answer Incorrect Answer
    E ULIP is a type of life insurance policy Correct Answer Incorrect Answer

    Solution

    There is no guarantee provided by the life insurer on ULI Plans. Unit Linked Insurance Plans (ULIPs) are a type of ‘Protection + Savings’ plans . It is a combination of life insurance and investment. Here wealth creation is the goal along with life cover where the insurance company puts a portion of investment towards life insurance and rest into a fund that is based on equity or debt or both just like in a mutual fund and matches with individual long-term goals. Here policyholder can pay a premium monthly or annually. One of the changes brought about by the Insurance Regulatory and Development Authority of India (IRDAI) in the year 2010 as regards ULIPs, was to increase the lock in a period from 3 years to 5 years . However, insurance being a long-term product, as an investor one may not really reap the benefit of the policy unless he/she hold it for the entire term of the policy which can range from 10 to 15 years.

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