ULIP full form is Unit Linked Insurance Plan, which is a multi-faceted life insurance product. A ULIP plan is a combination of life insurance and investment. ULIPs requires you (as a policyholder) to make regular premium payments, part of which is utilised to provide life insurance coverage. The remaining is pooled with the Images received from other policyholders, and then invested in financial instruments (i.e. equity and debt), similar to mutual funds. Investment in ULIP means you can stay financially secure against emergencies and grow your money as well.

ULIP Plan: Benefits You Should Know

Wondering what is ULIP plan benefits? ULIP means an opportunity to invest in various market-related securities such as equity, debt, and balanced funds to receive long-term investment returns. ULIP full form is Unit Linked Insurance Plans, which means your investments in funds are subject to market fluctuations. So, you can choose to invest in a variety of fund options with ULIP plan, depending upon your risk appetite and investment objectives.

You can also use a ULIP calculator to get an estimate of the premium payable towards the plan and the expected returns – something that will help you better understand 'what is ULIP plan' and its various advantages. Here are some other benefits of ULIP plans –

1. Market Linked Returns - ULIP means an opportunity to avail of earn market-linked returns by allocating a portion of the premium invested into market-linked instruments such as debt and equity instruments (in varying proportions).

2.Life Protection with Savings - Besides allocating a portion of the premium invested into market-linked instruments, Unit linked Insurance Plans (ULIP full form) also help protect you and your loved ones against any emergencies in life.
Thus you can avail of market-linked returns, while the ULIP plan takes care of your protection needs.
With the need of protection against life's eventualities out of the way, you can develop a regular habit of saving and investing and build substantial wealth over the long term with ULIP plans

3. FlexibilityULIP or Unit Linked Insurance Plans (ULIP full form) help you achieve your financial objectives by providing the flexibility to –

• Switch between investment funds based on your changing needs
• Make partial withdrawals after the completion of the initial 5-year lock-in period
• Single premium additions to help you invest additional sums of money (alongside the regular premium paid) as and when desired.

4. Level Paying Premiums - Under a ULIP plan, all regular premium or limited-term premium payments shall have a uniform or level premium payment structure. Any additional payments of premium are treated as a single premium, to provide life insurance cover.

5. Even Distribution of Charges - According to IRDAI, the charges levied on ULIP plans are evenly distributed during the 5-year lock-in period, to help ensure that the insurers eliminate the high front-ending of expenses. Make sure you understand what is ULIP plan charges that you will be paying, before investing your money.

6. Tax Benefits - The premium paid towards the ULIP plans is eligible for tax deduction under Section 80C of income tax 1961, up to a maximum of Rs. 1.5 lakh. At the same time, the maturity/death benefit received under the ULIP plan is tax-exempt under Section 10(10D) of the Income Tax Act 1961.

How to Choose the Best ULIP Plan?

Once you understand what is ULIP plan, the next step is to choose the best-suited policy for you since there is a variety of options available. So, before you invest in a ULIP plan, you must consider comparing and evaluating to choose the best ULIP plan available in India. Following are some of the key points to keep in mind while choosing the best ULIP plan:

• Evaluate Your Goals
• Choose the Right Life Insurance Cover Amount
• Stay Invested for an Extended Investment Tenure
• Avail Maximum Tax Benefits u/s 80C & 10 (10D)

How Does ULIPs Work?

In a ULIP (ULIP full form – Unit Linked Insurance Plan), the premium amount that you pay is allocated to the funds chosen by you, after the insurance company has deducted certain charges, including –

1)  Fund allocation charges
2)  Policy administration charges
3)  Fund management charges
4)  Mortality Charges

As a long-term financial plan, ULIP means providing ample wealth creation opportunities. On the other hand, the ULIP's meaning, as a life insurance product, is to provide more diversified returns in the form of life insurance protection.

The investments under ULIP plans are managed by dedicated fund managers, appointed by the insurance company. Thus, there is no need to track the investments on your own. If you want, you can track the performance of the individual ULIP plan fund options and switch between funds (without incurring any additional costs) to maximise the profit and deal with market volatility.