June 21, 2022

Investing in ULIPS at Lower Costs: All You Need to Know

  • by Jarrell Marley
  • 2 Years ago
  • Comments Off

ULIP investment is one of the most beneficial comprehensive life insurance plans that provide dual benefits, the life cover and the market-linked returns at maturity. It is a product available at an increased cost due to the flexibility in its features. However, it is certainly worth the investment. If you want to invest in the ULIP insurance at a lower cost, you can always choose to do so! Here are a few techniques to help you invest in the ULIP plan at a lower cost.

Before we get started, let us understand what a ULIP plan means.

What is a ULIP Plan?

Unit Linked Insurance Plan is a comprehensive life insurance plan that provides dual benefits, life cover and financial market-linked returns at maturity. In addition, you can choose the type of financial securities based on your risk appetite. Also, it provides the advantage of switching between the fund options based on the prevailing market conditions. It has a five-year lock-in period after which partial withdrawal becomes permissible.

Guide to investing in low-cost ULIP insurance

While the ULIP plan provides a range of benefits, it is slightly costlier compared to other insurance products. Therefore, it is important to employ the right strategies to lower costs and invest better.

  • Purchase the ULIP Plan online – When you decide to purchase an online ULIP plan, you can compare different products and choose the most affordable fund option. In addition, you can use different tools to compare the sum assured, associated charges such as the premium allocation charges, fund management charges, etc., and the returns for the longer term and choose the ideal product.

For example, the Tata AIA ULIP policy details the features online and also has a simple and seamless procedure to purchase and receive the benefits. Also, unlike buying the ULIP scheme offline, the online mode helps you benefit from low to nil charges.

  • Choose a longer policy term – If your goal is to purchase a low-cost ULIP, you must choose a longer policy term. The ULIP investment has a five-year lock-in period. It means you need to invest in it at least for five years to be eligible for partial withdrawal. You can take a portion of the returns during an emergency.

However, it is best advised to choose a longer policy term, such as 10-15 years, to benefit maximally. In the long term, your funds can reach a higher investment value. After extreme economic downturns, the fund value will resume increasing its value as the market conditions get corrected in the long term. Although the surrender charges are less, you can stay invested through the policy tenure to accumulate huge wealth at an affordable and low premium rate.

  • Purchase a higher value life cover – When you have decided to buy a ULIP plan, opt for a higher value life cover, you will get an increased death benefit. The higher the premium, the higher your tax advantage.

The premium you pay for the ULIP insurance will qualify for a tax deduction under Section 80C of the Income Tax Act, 1961. Therefore, indirectly it lowers your ULIP cost. If you want to park your retirement corpus, you can also opt for the ULIP plan one-time investment. It will provide a life cover and increase your wealth in the long term.

While considering the investment in ULIP insurance, it is important to note that there are comparatively higher charges such as the premium allocation charges, fund management charges, mortality charges, etc. Therefore, evaluate the premium based on these charges to determine the cost and find ways to reduce it.


ULIP insurance provides the life cover for the policy term and the market-linked returns at maturity. However, it is available at an increased cost considering the additional charges. You can purchase the ULIP plan online, invest for the long term and choose a higher life cover to reduce the ULIP cost. Fund managers from your insurance provider can aid in choosing the fund option and switching between them as and when required. Utilise the flexible features and reduce the premium cost to benefit maximally!

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