Looking for the ULIP full form in insurance? ULIP stands for Unit Linked Insurance Plan, a single policy that combines life cover with market‑linked investments. In a ULIP, part of your premium secures insurance protection. At the same time, the rest is invested in equity, debt, or balanced funds you choose, providing your family protection with long‑term growth potential. You can invest in equity, debt, or a combination of both, depending on your life goals and risk appetite.
In this guide, explore the ULIP meaning, who they suit, its key benefits and trade‑offs to consider before investing, so you can decide if a ULIP fits your financial goals.
Key Takeaways
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A ULIP is a life insurance policy that combines protection with investment by allocating your premium into two parts, one for life cover and the other into market‑linked funds such as equity, debt, or balanced options for investment. Your money buys “units,” and each unit has a Net Asset Value (NAV) that’s updated daily based on market movement. Since returns track the market, your fund value rises or falls in line with the NAV; you can manage risk by spreading allocations across multiple ULIP funds and rebalancing them over time.
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Just like every life insurance product, you are required to pay a small amount, known as premiums, to keep your policy running. Some ULIPs, such as Promise4Growth Plus Plan, offer Return of Mortality Charges, which means that all the deductions made during the policy term are added back to the fund value at maturity, provided all the premiums are paid.
Meanwhile, the premium you pay is allocated to different funds according to the ratio you choose.
After your premium is allocated to your chosen funds, units are assigned as per your contribution. Units are calculated based on NAV (Net Asset Value).
After units are assigned, the insurance provider deducts some charges from your fund. The various types of charges are:
Some charges are deducted monthly, while some charges are deducted quarterly. After these charges, the next thing that comes to mind is how your funds are managed.
In ULIPs, your fund is managed by highly qualified and experienced fund managers. Promise4Growth Plus offers you four dynamic fund management strategies.
The safety switch option can be selected only in the last 4 years of the policy. While the other three strategies can be used at any time.
Partial Withdrawal: ULIPs come with a mandatory 5-year lock-in period. Once this period is completed, policyholders can make partial withdrawals from the policy value, subject to plan conditions.
The best ULIPs offer several advantages to the average investor. Here’s why more people are choosing to buy the best ULIP offered by financial institutions.
IRDAI reduced ULIP minimum sum assured from 10x to 7x annual premium, boosting investment portion while retaining tax benefits at 10x
Source: GoDigit
ULIP is one of the best investment options available in the market. While anyone aged 18 or above can invest, you should especially consider a ULIP if you fall into the following categories.
ULIPs are often regarded as a reliable investment option that can help you accumulate substantial wealth. Not only this, but it also offers protection to your family members with its life insurance component. Here is why it is a good investment option.
Each ULIP has its own set of features and benefits. Thus, choosing a ULIP can be quite a task. Thus, consider the following factors to select a plan that best suits your needs.
ULIPs are versatile investments suitable for almost every class of investor capable of investing a minimum of ₹2,000 per month. However, ULIPs have features that make this instrument more useful for investors in a specific spectrum of classes:
ULIP has a default life cover available to your family, like any other life insurance plan. However, you can also protect the ultimate goal with the premium protection option.
With this feature, the insurer will not only pay the sum assured to your family upon your demise but also fulfil your remaining premiums.
You want to have a single plan for your retirement pension goal: ULIP plans like Promise4Growth Plus offer a century option. This option allows you to hold your ULIP until the age of 100. So, you can build your corpus until retirement and then draw a pension from it afterwards.
Insurance companies offer you many investment options. These can be broadly classified into these categories.
A ULIP is a variant of life insurance that also offers investment options. The investment component of ULIPs operates similarly to that of mutual funds. The premium you pay goes towards the fund you want to invest in, as well as life cover. ULIP provides you with flexibility in choosing your premium payment term and mode.
You can pay your premiums:
Promise4Growth Plus comes in 3 different variants:
ULIPs work best when viewed as a long-term companion rather than a quick-return product. By blending protection with market-linked growth, they help you stay invested, disciplined, and goal-focused. When chosen thoughtfully, a ULIP can support life goals while ensuring your family’s financial security remains intact.
ULIP's full form is Unit Linked Insurance Plan. In simple terms, ULIP insurance means an insurance product that combines life cover with market‑linked investments in one policy.
Before you invest in a ULIP, make sure you go through the following things:
The goal you want to achieve with ULIP
Charges that are levied in ULIP
Fund options offered to you
Portfolio management strategies are offered
Bonuses and other benefits
Tax-Benefits
Policy exclusions, terms, and conditions
The amount of premium that will go to the purchase of units varies from insurer to insurer. The various charges that come with ULIPs, such as premium allocation charges and administration fees, are deducted from the premium.
After the charges are deducted, a portion of the premium is also allocated towards life insurance. However, this is a very small percentage of the premium. The remaining amount is used to purchase units.
To provide users time to get to know the policy they have purchased, insurance companies give the customers a ‘free-look period’. During this period, you have the option to cancel your policy without penalties. This period is typically 15 days and is provided to ensure you have selected the correct policy.
During this period, if you are not satisfied, you can cancel your policy. The premium paid and the charges will be refunded to you. However, the expenses incurred by the policy, such as stamp duty and medical examination costs, will not be refunded.
Net Asset Value, commonly known as NAV, is the value determined by deducting liabilities and payables from the total value of all assets held by the fund. When divided by the total number of outstanding units allocated to the investors in the fund, this Net asset value (NAV) becomes the Unit NAV.
Trends in the Unit NAV of the fund help you to assess the performance of the fund. Units are allocated based on the premium paid and the ongoing Unit NAV.
There is no single best time to invest in ULIP. If you are starting to plan for a long-term goal you have to achieve, then investment in ULIP can be a good idea.
ULIP offers you the opportunity to invest in the market and grow your wealth. This can be used to achieve goals such as retirement, child marriage, education, etc. At the same time, it ensures that your family stays protected even after you are gone by providing life insurance coverage.
When you purchase a ULIP, you must choose the funds in which you will invest. Based on the premium, units are assigned to you. The total value of all the units assigned to you is the ‘Fund Value’.
The fund value is calculated by multiplying the Net Asset Value (NAV) of an asset by the number of units held.
ULIP stands for Unit Linked Insurance Plan. In insurance, it refers to a plan combining life cover with market-linked investments. Banks may distribute ULIPs, but the product remains an insurance offering regulated by IRDAI.
Traditional plans focus on guaranteed returns and protection, while ULIPs invest premiums in market-linked funds, offering higher growth potential with flexibility and transparency.
A ULIP is both an investment plan and an insurance plan. It provides life insurance cover while investing part of your premium in equity or debt funds, making it a hybrid financial solution.
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.
Canara HSBC Life Insurance offers online ULIP plans that blend life insurance protection with investment growth, helping you build wealth while securing your family's future.
