Benefits of Choosing Unit Linked Insurance Policies

Launched by the Unit Trust of India in 1971, the unit linked insurance policy (ULIP) offers both savings and protection for the policy holder. Essentially, of the amount you invest in such a plan, a portion goes to providing you life cover, working in the same way as a life insurance policy. The remaining amount is invested in funds, which in turn invest in bonds or stocks, offering the policyholder wealth creation opportunities. With the Indian government opening up the insurance industry to foreign investment since 2001 and with fresh guidelines put forth by the IRDA in 2005, a plethora of choices have opened up for the consumer.

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Features of ULIPs as a Life Insurance Policy

A perfect combination of a life insurance policy and a savings scheme, ULIPs are characterized by features such as:
•	The option to switch between funds
•	The choice to either increase or decrease the amount used as life cover, even during the tenure of the policy
•	Added protection through a variety of riders that can be attached to the life insurance policy
•	Top up option
•	Option to surrender before the completion of the term

Benefits of ULIPs

Apart from the fact that Unit Linked insurance plans offer tax benefits under section 80c of the Indian Income Tax Act, there are various other benefits that the policy holder stands to gain:
•	The biggest advantage is the flexibility that such schemes offer. You can not only choose the duration of cover, but also how much to put into a life insurance policy and how much into investment funds.
•	Despite the initial investment being higher than many other insurance options, the transparency that ULIPs offer is commendable because you know exactly what benefits you are paying for. You not only have access to daily NAV updates, you also get quarterly and annual reports on how your investment is doing
•	The earnings from such schemes are completely tax exempt.
•	You can choose your investment vehicle based on your risk appetite and financial goals, from low risk to medium and high risk options.
•	With the option to withdraw a portion of the savings after the completion of the first five years, such schemes also offer liquidity during an emergency.

Types of Funds to Choose From

When you choose to combine your life insurance policy with your investment goals, there are several types of funds that you can choose to invest in, depending on your risk appetite, such as:
•	Fixed Interest, Income and Bond Funds: These include investments in government securities, corporate bonds and other fixed income investment vehicles. They entail medium risk.
•	Equity Funds: Here your money will be invested in company shares with the aim of reaping maximum profits from share price movement. Such investment entails medium to high risk.
•	Balanced Funds: This is a combination of fixed income and equity investment and entails medium risk.
•	Cash or Secured Funds: Also called Money Market Funds, here investments are made in money market schemes, cash and bank deposits. This is the lowest risk option among the various types of investment options.

BEWARE OF SPURIOUS PHONE CALLS AND FICTITIOUS/FRAUDULENT OFFERS. IRDAI clarifies to public that • IRDAI or its officials do not involve in activities like sale of any kind of insurance or financial products nor invest premiums. • IRDAI does not announce any bonus. Public receiving such phone calls are requested to lodge a police complaint along with details of phone call, number.

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*For a healthy non-smoker male 25 years old with a policy term of 20 years, level cover option, paying Rs. 6,360 as annual premium without service tax for a sum assured of Rs. 1 cr. (Premium for one day = Annual Premium / No of days in a year = Rs. 6,360 / 365 = Rs.17.43 - Rs. 18.00 approximately). Premium mentioned above is indicative and might change subject to underwriting. Premiums can be paid only in Annual Mode of Premium Payment. #For the Premium paid on Life Insurance of Rs. 1.5 lakhs, save tax upto Rs. 51, 912/- (Assuming highest tax bracket applicable for an individual and subject to provision of Income Tax Act, 1961.) No medicals required for a cover up to Rs. 75 lakhs for the age upto 40 years. No medical underwriting if no adverse declaration is made in the proposal form by the policyholder.

For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale. Tax benefits, are as per the Income Tax laws & are subject to change from time to time. Please consult your tax advisor for details. Trade logo displayed above belongs to State Bank of India and is used by SBI Life under license. SBI Life - eShield, UIN: 111N089V01, a non-participating pure term insurance plan. Registered & Corporate Office: SBI Life Insurance Co. Ltd, Natraj, M.V. Road & Western Express Highway Junction, Andheri (East), Mumbai - 400 069. IRDAI Registration no. 111. CIN: U99999MH2000PLC129113. www.sbilife.co.in

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