Universal Life Policy

Majority of people find it difficult to choose a single Life Insurance Plan that would fulfill the requirements of investment as well as insurance.

Universal Life Policy or ULP for short gives the best of an Endowment Policy as well as ULIP.

You could invest in a usual term plan or an endowment policy, a pure Insurance Policy which would give your dependents sufficient money for their survival in case of your unfortunate demise and the premiums are lower.

The drawback of this plan is you will not be entitled to any returns if you were to survive the term policy. On the other hand Ulip or unit linked insurance plans gives you the benefit of choosing where you want to invest as well as the benefit of continued life coverage after a few years even if premiums are not paid. There are downsides like shorter life cover, costlier than a term policy and extra charges like fund management charges etc.

These merits and demerits make it difficult to select the right policy. This article will shed light on Universal Life policy or ULP which gives the best of both an endowment policy and a Ulip.

Pure ULPs give you the freedom of changing the premium amount with regards to your changing income during its tenure. You can also change the sum assured if your Insurance needs happen to change. Also, there is an option to change the duration of Insurance Plan that is, the tenure of the policy.

A pure ULP is still not available in India as of now but IRDA (Insurance Regulatory and Development Authority) has the power to increase the flexibility plans as they have permitted their introduction. ULP is still in the budding stage thus are only two players in India who currently offer ULP, Bharti Axa Life Insurance and Max New York Life. But it is sure to grow soon due to its benefits.

Let us now understand the working.

A pure ULP is somewhat like a term policy minus the fund management charges so there is savings on the premium amount.
ULP remains active with reduced sum assured if you choose to stop premium payments (similar to the bonus declared by the insurer for agreed time frame).
Under section 10 10(D) and 80C of I-T Act you receive tax benefits as proceeds at maturity are tax-free.

You may want to know how is a ULP suitable to your needs as in why go for it?

Like we said earlier also a ULP is fitting as it would take care of your family’s needs in case of your demise or with returns at maturity of the policy in case you survive the term. So you gain either ways as it gives the best combination of death benefits an Endowment Policy gives and the transparency and returns of ULIPs.

Secondly the flexibility of the pure plan to change the premium amount, tenure as well as sum assured. It also has added benefits like bonus on investment, tax benefits on maturity returns, zero fund management charges and reduced sum assure if you stop premium payments.

The only downside you might find is you will not know where your money is invested like term policy.

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Tags: bharti axa life insurance, insurance policy, Life Insurance, Max New York Life, term plan, ULIP