consider-this-checklist-before-buying-a-ulip-plan-online

Checklist to Review Before Buying a ULIP Plan Online

Are ULIPs right for you? Here’s what to check before investing online.

Written by : Knowledge Centre Team

2026-01-07

3894 Views

7 minutes read

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Planning your financial future can feel tricky, especially when you are just starting out. From savings to investments, there are many options that promise growth. One such tool that has gained popularity is the Unit-Linked Insurance Plan (ULIP). It helps you grow your money and offers life insurance cover to protect your loved ones. 

This dual benefit makes ULIPs a smart option for those looking to balance risk and return. Now, the question arises whether such plans can be bought online safely, given their availability. Let us determine if buying ULIPs is as safe as their investment components are.

Key Takeaways


  • ULIPs offer life cover and investment in one plan, making them a smart dual-benefit choice.
  • Your ULIP returns depend on your risk appetite and chosen fund type.
  • ULIPs offer tax savings under Sections 80C and 10(10D) of the Income Tax Act.
  • ULIP plans need a long-term commitment for optimal returns beyond the lock-in period.
  • Switching between funds is allowed in ULIPs for better flexibility.

What is ULIP | Unit Linked Insurance Plan |

What Does Investing in ULIP Mean?

Investing in a ULIP requires you to pay a fixed premium for the selected cover amount. While some portion of the paid premium is used for providing insurance coverage, the remaining portion is invested in a debt or equity instrument. When it comes to saving money and making financial decisions, it is normal human nature to gravitate towards products that have “more” benefits. 

This is where Unit Linked Insurance Plans (ULIPs) fit just right. They pack multiple benefits in a single investment and also ensure significant returns. ULIPs offer dual benefits of providing individuals with an insurance cover in addition to acting as an investment solution, helping them create wealth to meet their financial goals.

First things first, you should be fully aware of how ULIPs actually work. As an investor, you have the flexibility to choose between equity, debt, and a balanced fund option for your ULIP investment plan. 

Additionally, you can also choose to switch between investment plans during the course of the premium payment term. Fund managers assigned to your ULIP Plan are responsible for managing your investment according to the fund type and investing in debt or equity instruments. Moreover, it is essential to note that the lock-in period for ULIPs is 5 years, and their performance or ability to generate returns is linked to the market, as per the IRDAI.

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What All You Must Consider When Buying a ULIP Plan Online?

A ULIP offers the best of both worlds under one policy. With the convenience of digital access, more individuals today prefer buying ULIPs online. However, while the process may be easy, choosing the right ULIP requires careful consideration of multiple factors.

So, here’s a checklist of things you must consider before buying a ULIP plan online:

  • Know Your Risk Appetite: In a ULIP investment setup, the policyholder has to bear the volatility of market risks. To be prepared, you need to start by knowing your risk appetite and determining your financial commitments before investing in a ULIP plan. Based on your risk appetite, you can choose an appropriate fund option ranging from low to high risk.

    The downside of fund options comes with funds predominantly invested in equities, which improve your returns. On the other hand are lower-risk fund options like market securities and debts to get steady returns. You also have fund options in between, where a part is invested in a manner suitable for a medium risk return.
  • Understand Premium Payment Options: Different ULIPs may offer different kinds of premium payment options. The most popular options include limited premium payment and regular premium payment, with the flexibility to pay in annual, half-yearly, quarterly, or monthly modes.

    You must select a payment type based on your financial niche. A limited premium payment option lets you choose a particular number of years, say 5 or 7, to pay your premiums. Alternatively, you can choose a regular payment option where you pay the amount throughout the entire policy term.
  • List down all ULIP Charges: An essential point to remember before investing in ULIP is the calculation of charges that come along with the policy. In its initial stage, ULIP plans often suffer from insufficient perception due to high charges paid in terms of allocation charges, switching charges, administration charges, surrender charges, etc.

    Accommodate these charges as part of your expenses and see how comfortable you are with buying a ULIP plan. However, several policies like the Promise4Growth Plus by Canara HSBC Life Insurance do not charge additional fees like fund switching charges, along with a benefit of return of mortality charges.

  • Remember the Flexibility of Switching Funds: An investor’s risk appetite might change with time. Therefore, consider that you have bought a ULIP plan. You must utilise the feature of fund switching to aim for the maximum possible returns. So, if your risk appetite increases considerably, allowing you to switch funds flexibly, this will keep your options open for investing in funds that are likely to yield a higher return. Therefore, when you opt for a ULIP plan, note the number of free switches available, the cost per switch and the variability of switches that the policy offers you.

  • Are You in For Long-Term Commitment? A common misconception about ULIPs is that investors only need to pay premiums during the lock-in period, which usually lasts five years. This leads many to mistakenly believe they can stop payments after this period, prompting them to withdraw early and miss out on the long-term benefits of the plan. ULIP plans, however, necessitate a long-term investment horizon to get the desired returns out of it. There are several reasons you should not surrender your ULIP policy after the lock-in period. If you surrender the policy beyond the lock-in period, you may end up losing more than you invested, as the charges cannot be averaged in a short-term policy.

  • Check the Online Platform’s Credibility: When buying a ULIP plan online, it is important to ensure that the platform you are using is reliable and secure. Many people are drawn to websites that appear flashy or offer promotional deals. However, not all platforms operate with transparency or follow proper regulations. Always prefer to purchase directly from the official website of the insurance provider who are registered with IRDAI.

    Insurance Regulatory and Development Authority of India (IRDAI ) is an official body, and any insurance provider meeting their guidelines can be considered reliable. A genuine online platform will offer clarity in policy documents, provide detailed benefit illustrations, and allow you to navigate easily without confusion.

  • Know the Tax Implications: One of the key attractions of a ULIP plan is the tax benefit it offers, but there are specific rules that affect how much you can actually save. When you pay premiums towards a ULIP, the amount qualifies for a deduction under Section 80C of the Income Tax Act. This means that you can reduce your taxable income by up to ₹1.5 lakh in a financial year, provided all conditions are met.

    In addition to tax savings on the premium, there is also a benefit on the maturity value. Under Section 10(10D), if the annual premium you pay is not more than 10 per cent of the sum assured, the returns you receive on maturity are also tax-free. However, this benefit is not automatic for all. If your annual premium is more than ₹2.5 lakh and the policy was purchased after 1 February 2021, the maturity proceeds may be taxed as capital gains.

Conclusion

Growing your wealth is a priority in order to ensure a secure future for your family, and ULIP plans prove to be a powerful financial product for this purpose. Now that you have the checklist, be aware of the facts when buying a ULIP plan online..

For expert guidance, flexible plan options, and the convenience of digital access, consider exploring ULIP offerings by Canara HSBC Life Insurance. With our trusted legacy and customer-first approach, your investment journey can be both rewarding and secure.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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