ULIP

A Unit Linked Insurance Plan (ULIP) is a product offered by insurance companies that unlike a pure insurance policy gives investors the benefits of both insurance and investment under a single integrated plan.

ULIP is an abbreviation for Unit Linked Insurance Policy/Plan. What does unit linked mean? It means that it is linked to units of investment which are made in the capital and money markets. Hence, ULIPs are a combination of life insurance and market linked investment. Therefore, it provides you life cover as well as capital appreciation linked to the capital markets.

The full amount of premium paid is not allocated to purchase units. Insurers allot units on the portion of the premium remaining after providing for various charges under the plan. Thus, the portion of premium used to purchase units varies from product to product.