ULIP is a dual plan which provides investment option with insurance benefits.
The
ulip plan cycle goes like this:-
The premium invested every year is broken up into two parts :-
1. Charges
2. Money available for investment
1. Charges: mortality charges, administration charges and fund management charges etc.
2. Money available for investment: This money is pooled into a fund. This fund is used to invests money in stocks or bonds. This fund is usually of three types
a. an equity (growth) fund,
b. a balanced fund and
c. a fund which invests in bonds.
The invester can choose the fund into which he wants his money invested.
If the insured dies when the policy is active, the nominee gets death benefit (sum assured + fund value) otherwise invester gets fund value.