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    Unit-Linked Insurance Plans

    Over the past two decades, we have catered to many Indian families. We have a deep & rich understanding of your unique needs, plans and life goals. We are proud to present to you & your family our thoughtfully crafted plans, for their financial wellbeing.

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    Unit-Linked Insurance Plans

    What is ULIP and How to Create More Wealth with It?

    ULIP full form is Unit Linked Insurance Plans, offering an amalgamation of insurance and investment. A portion of the premiums of ULIP plans is used to provide an insurance cover for your family. The remainder premium is invested in a market-linked mutual fund of your choice. You can select the mutual fund per your risk appetite, investment horizon, and financial goals. Further, a ULIP gives you the flexibility to alter your investment portfolio with changing needs and life stages in the future.

    Typically, unit-linked plans have a five-year lock-in period. During this time, you cannot withdraw funds from your ULIP plan. ULIP plans offer tax benefits on premiums and maturity/death benefits received.
    In terms of wealth accumulation, ULIP investments have been ruling the charts of investors. In a ULIP plan, you can choose to invest in mutual funds of your choice.

    Depending on your risk appetite, you can choose from debt funds or equity funds to invest in. You also have an option to invest in hybrid mutual funds, offering a combination of equity and debt funds. Irrespective of the fund you choose, the market-linked returns of the plan help you accumulate wealth and fulfil your long-term financial goals, such as buying a house, saving for retirement, paying for your child’s education, and more.

    Typically, an average ten-year ULIP produces annual returns between 10 and 12%. These returns are significantly higher than several other investment plans, including National Savings Certificate (NSC), Public Provident Fund (PPF), Equity-Linked Savings Scheme (ELSS), tax-saving mutual funds, etc. ULIP plans have the potential to outpace inflation if you remain invested in the policy for at least ten years.

    How Does ULIP Work?

    ULIP stands for Unit Linked Insurance Plan. In these plans, one share of your premiums provides a secure life cover for the policyholder, whereas the other premium share is invested in different fund options. You can choose the fund aligned with your wealth creation plan and risk tolerance.

    In case of unfortunate death of the policyholder during the ULIP insurance tenure, the nominated beneficiary of the policy will receive the death insurance benefit and/or the fund value, whichever is higher. On the investment front, the insurance company grants ‘units’ as per the proportion of money invested in the market-linked funds. This unit represents the investment value, denoted by a NAV (Net Asset Value) declared daily. If the policyholder survives the insurance duration, the maturity amount payable will be the fund value of the ULIP wealth plan.

     

    Why Invest in ULIP?

    1. Insurance cover, savings and investment: ULIPs combine insurance and investment, implying you can secure the financial future of your loved ones while also earning market-linked returns from your money. In case of an unfortunate event during the ULIP insurance tenure, your family will receive the death benefit, which can help them maintain their standard of living and fulfil their financial goals in your absence. The dual benefit of insurance and investment is an added advantage of a ULIP plan.
    2. Market-linked returns: ULIP schemes are an ideal wealth builder plan. These schemes allow you to invest in funds and generate wealth through high market-based returns. On average a ten-year ULIP policy generates 10-12% returns, which is comparatively higher than other investment plans like NSC, PPF, etc. The market-based returns help you achieve your financial goals, such as buying a house, paying for your child’s education, saving for your retirement, etc. You can use ULIP NAV to keep a tab on your ULIP returns.
    3. Investment flexibility: ULIP investments are one of the most flexible options available in the market. You can invest in a fund that aligns with your risk tolerance. For instance, if you are a high-risk investor, you can invest in equity mutual funds to generate high returns. Alternatively, if you are a risk-averse investor, you can choose debt funds for investment. ULIP schemes give you the fund switch option, allowing you to change your fund allocation (debt and equity proportion). Further, ULIP investments are managed by professional fund managers, enabling you to benefit from their market expertise and experience.
    4. ULIP tax benefits: The premiums you pay for your ULIP insurance plan are exempt from taxes up to ₹1.5 lakhs under Section 80C. The death benefit received by the nominee in case of demise of the policyholder is also tax-exempt under Section 10(10D). Maturity benefits for unit-linked insurance plans are tax-free under Section 10(10D), provided their annual premiums are lower than ₹2.5 lakhs. There is no capital gain tax for ULIP plans with annual premiums below ₹2.5 lakh. 
    5. Investment ease and transparency: In ULIP insurance, you can select your premium payment mode (annual, semi-annual, quarterly or monthly), premium paying term, and ULIP plan tenure. ULIP policies are easy to understand, declare their NAV daily, and disclose all returns timely. ULIPs are regulated by the Insurance Regulatory and Development Authority (IRDA).

    Types of ULIPs

    Unit Linked Insurance Policy can best be categorised per the following parameters:

    Type of funds they invest in

    • Equity ULIPs: Premium is invested in equity or equity-related securities. These are high-risk ULIPs.
    • Debt ULIPs: Premium is invested in debt and other fixed-income securities, carrying low-risk and assured returns.
    • Balanced ULIPs: Premiums are balanced between the debt and equity market to balance the investment risk.

    The end-use of funds

    • ULIP for retirement: In this ULIP plan, you pay premiums until your employment duration with the employer. The accumulated sum inclusive of returns is paid in the form of an annuity to you after retirement.
    • ULIP for wealth accumulation: These are the best funds for early investors, who can take high risk and aim to generate high returns to accumulate a large corpus in the long term.
    • ULIP for children education: These special ULIPs allow you to take small withdrawals during the key milestones in your child’s life, ensuring their lives are not financially stressed.

    Death benefit

    •  Type 1 ULIP plans: In this type of ULIP, the sum assured or fund value, whichever is higher is payable as a death benefit to the nominee of the ULIP insurance. The mortality charge in the Type 1 ULIP plan reduces each year because of the reducing difference between the fund value and the sum assured under the policy. 
    • Type 2 ULIP plans: In this policy, the death benefit payable to the nominee is equal to the sum assured plus the fund value of the ULIP investment plan. Premiums for Type 2 ULIP plans are higher than Type 1 ULIP investment plans.

    How to Choose the Best ULIP (Wealth Creation) Plans?

    Here are some parameters that you can use to select the best ULIP in India:

    1. Know your financial goals and insurance objective: Before you buy a wealth insurance policy, know your investment goa, such as creating a retirement corpus, sponsoring the education of your child, buying a home, etc. Alternatively, also understand how much insurance you need? This will depend on your life stage and financial responsibilities.
    2. Research and Compare ULIPs: Research the market to create a list of the top ULIP plans. Compare different ULIP investments - in terms of sum assured, value per unit, past performance (at least three to four years), fund composition, fund manager experience, etc. Also, assess the investment flexibility offered by the ULIP policy, such as the number of free fund switches, ULIP premium payment modes and tenure, etc. 
    3. Find the ULIP charges: After shortlisting, thoroughly check the ULIP charges of each policy. These will include administration charges, fund management fees, surrender charges, mortality charges, premium allocation fees, fund switching fees, and more. Choose a ULIP plan with minimum charges.
    4. Check solvency and claim settlement ratio: Assess the solvency and claim settlement ratio of the insurer. The solvency ratio should not be less than 1.5, and the claim settlement ratio should ideally be higher than 90%.

    Our Best ULIP Plans/Wealth Plans

    PNB MetLife offers a range of wealth plans adequately fulfilling your investment and insurance needs. Our funds have reported consistently high performance over the last five years. You can check out the PNB MetLife ULIP plan charges that offer utmost investment flexibility and transparency.

    Here are two of what can be considered as our best ULIP plans:

    • MSPP (PNB MetLife Smart Platinum Plus):
      PNB MetLife Funds rank No. 1 across #Morningstar Insurance ULIP Funds in 5 categories*.
    • MMWP (PNB MetLife Mera Wealth Plan):
      PNB MetLife Funds rank No. 1 across #Morningstar Insurance ULIP Funds in 4 categories*.

    High Performing ULIP Funds

    Fund Category (Group) PNB MetLife Fund Rank Total Fund per Category
    Multiplier III Large cap (equity) 1 102
    Virtue II Multi cap (equity) 1 51
    Mid Cap Mid cap (equity) 1 19
    Balanced Opportunities Balanced allocation (allocation) 1 91
    Protector II Medium to Long Duration (fixed income) 2 57

    *Source: Morningstar India, PNB MetLife website *1 year performance, as of December 13, 2021

    How to manage ULIP funds?

    There are two ways to manage your ULIP funds:

    • Automatic switching: In this method, your ULIP is managed by the professional fund manager based on pre-defined investment criteria.
    • Self-switching: In this method, you can switch your ULIP debt and equity proportion to minimize losses, tap high market returns, mitigate market fluctuations, and more. 

    Key Features of ULIP

    • Investment allocation: ULIPs allow you to invest per your risk appetite. You can choose to be aggressive and invest in equity funds or take the conservative route and invest in debt funds.  
    • Flexibility: ULIPs are one of the most flexible investment options in the market. You can invest per your risk appetite and financial goals and switch funds to match your changing needs over time. In some cases, you can also make partial withdrawals and invest an additional sum as a top-up in your existing ULIP plan. ULIPs are transparent and allow you to track performance through NAV declared daily.
    • Fund switch: If your investment requirements change or you foresee any market change, ULIP investments allow you to alter your fund allocation. This means you can safeguard your portfolio against market fluctuations by diverting your portfolio towards debt during an economic slump and redirecting it to equity during market growth.
    • Top-ups: You may want to increase your ULIP investment from time to time, which is possible through the top-up facility offered by ULIP plans. You can invest an amount above your regular investment.
    • Tax-savings: ULIPs are the best tax-saving instruments as they enjoy the EEE (exempt-exempt-exempt) status in terms of premiums, capital gains and maturity or death benefit. However, maturity and capital gain tax benefits are subject to some conditions.

    Benefits of ULIP

    • Dual benefit in a single investment: ULIPs are the best wealth insurance plans as they combine insurance and investment in a single product, fulfilling two critical needs.
    • Personalized investment choices: You can choose ULIP investments according to your risk appetite and financial goals. Choose bond mutual funds if you have a low-risk tolerance, equity funds if you have a high-risk appetite. 
    • Investment flexibility: You can switch the debt and equity composition of your ULIP investment based on risk preference and market knowledge. 
    • Supports long-term goals: Unit-linked products provide compound growth resulting in higher net returns, which is beneficial for fulfilling long-term goals, such as buying a house, etc.
    • ULIP tax benefits: ULIPs are a tax-efficient investment. ULIP premiums are eligible for tax exemption under Section 80C. The returns on death and maturity are tax-exempt under Section 10(10D) of the Income Tax Act, 1961. You also get tax benefits on capital gains, subject to some conditions. 

    What is a ULIP Calculator?

    ULIP calculator is an online free tool offered by insurance companies, allowing you to understand your ULIP plan cover and corpus requirements. The ULIP plan calculator asks for inputs like ULIP investment sum, premium payment frequency, investment period, expected rate of return, etc. These details will enable the calculator to give out the future value of your ULIP investment. You can use this information to estimate the amount you should invest in a ULIP plan to achieve your financial goals.

    ULIP Charges

    Some of the ULIP plan charges include:

    • Premium allocation charge covers costs like policy issuance, medical tests, underwriting expenses, etc.
    • Administration charges are deducted by the insurer for managing the ULIP plan.
    • A surrender charge is a fee you pay for terminating your ULIP policy before its maturity date. The surrender charge is a percentage of the ULIP fund value or premium.
    • The mortality charge is borne by the insurer to provide a life insurance cover. Mortality charges are deducted monthly and vary with the sum assured and age of the ULIP plan.
    • Fund switching charge is the fee you pay for switching the initial proportion of debt and equity in your ULIP portfolio. Most companies offer free fund switching.
    • Partial withdrawal charges are a fee you pay for withdrawing money from your ULIP plan before the expiry of the lock-in period.

    Overall, ULIPs are a wise investment choice for you and your family’s future financial security. However, study different ULIPs before making an informed investment decision.

    AD-F/2021-22/851

    Frequently Asked Questions

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    What are ULIP plans?

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    A ULIP offers a mix of both insurance and investment. A part of your premiums is used to provide insurance cover while the remainder is invested in the fund of your choice. 

    What is a wealth plan?

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    A wealth plan is a unit-linked wealth and savings plan that offers an insurance cover for the financial safety of your loved ones and market-based returns, helping you achieve your financial goals.

    Why is a wealth plan important?

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    A wealth plan is important because it fulfils two needs in one single offering. You get the insurance cover along with market-based returns.

    How will PNB MetLife ULIP plan help me?

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    PNB MetLife ULIPs are among the best wealth insurance plans, allowing you to secure the financial future of your loved ones in your absence while also earning high returns through market-based investments.

    Who should buy a ULIP plan?

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    Everyone with a stable income source should consider investing in a ULIP plan, irrespective of age, life stage and financial responsibilities. The earlier you invest, the more you benefit from the power of compounding.

    How does the ULIP lock-in period help in long term goals?

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    ULIP lock-in period ensures you stay invested for an adequate duration, allowing your money sufficient time to benefit from the power of compounding.

    How is the fund value calculated in ULIP?

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    ULIP fund value is the Net asset value (NAV) representing the per unit share market value.
    NAV = Total value of cash and securities in the portfolio – liabilities/number of outstanding shares

     

    How do I create a wealth plan?

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    PNB MetLife allows you to create your wealth plan with its self-managed option. In this medium, you manage your ULIP investments directly and can switch between ten other ULIP funds. You can redirect premiums per your risk appetite and market conditions.

    Is ULIP Better than Mutual Funds?

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    Mutual funds are pure investment products, whereas ULIPs combine insurance and mutual funds in a single offering.

    Which ULIP Plan is best?

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    ULIP plans that align with your risk tolerance and financial goals are the best for your need. You can consider investing in PNB MetLife Funds that rank high across Morningstar ULIP Funds in four prime categories.

    Are ULIPs a good investment?

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    ULIPs are a good investment because they offer insurance plus investment benefits along with tax advantages.

    When can I withdraw ULIP?

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    You can withdraw ULIP funds penalty-free after the five-year ULIP lock-in period.

    Disclaimer

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    As your trusted life insurance partner, PNB MetLife is with you amidst the current COVID-19 outbreak. Our policies also cover COVID-19 Claims. In case of a Death Claim, kindly submit the signed Claim Intimation Letter mentioning the policy number, brief of the insured event and other claim documents on the email mentioned herewith. Please write-in to us at claimshelpdesk@pnbmetlife.com or indiaservice@pnbmetlife.co.in. You can also call us on 1800-425-6969 for death claims intimations and for any queries on Monday - Saturday between 10:00 am - 7:00 pm.

    PNB MetLife Insurance, amongst the trusted Life Insurance companies in India, aims to provide a wide range of Life Insurance products that suits the needs of an individual at every stage of his life. Life Insurance Plans range from Term Life Insurance PlansTerm PlanProtection PlansLong Term Savings Plans , Retirement Plans & Child Education Plan.

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