Page 255 - DCOM507_STOCK_MARKET_OPERATIONS

Stock Market Operations

Notes Since the fund of your choice has an underlying investment – either in equity or debt or a
combination of the two – your fund value will reflect the performance of the underlying asset
classes. At the time of maturity of your plan, you are entitled to receive the fund value as at the
time of maturity. The pie-chart below illustrates the split of your ULIP premium in a graphical
format.
Figure 12.3: Premium Break Up

Premium Allocation
Charge
Invested Amount
Administration Charge
Mortality Charge

Fund Management
Charge

In addition to the investment fund ULIPs give you the benefit of insurance cover as well. The
mortality charge mentioned above goes towards provision of this cover.

Over a period of time, the component of charges as a percentage of the premium paid tends to
decrease. Which is why, you should continue paying your premiums regularly. That is the best
way of making your ULIP deliver on its dual benefit of protection and wealth creation.
ULIPs are the most talked about investment option today! In fact, they have contributed over
50% of new business for companies like Birla Sun Life and ICICI Prudential. Are you looking for
safe investment options in India? Are ULIPs better than Mutual Funds? Are your returns
sustainable with ULIPs? Will your ULIP investment work only if you plan to stay invested for a
long term? Read on and find out.
Limited amount of money available to invest, need insurance and also want to invest in a
mutual fund or similar investment? ULIPs could be the ideal option for you. Unit Linked Insurance
Plan (ULIP) is an insurance policy where funds are invested in the capital market. You are sure
to find insurance companies vying for your attention with ULIPs in new and attractive packages.
ULIPs come with both insurance and investment components. If you’re open to high risk
investment options, you can shun the traditional endowment plans for ULIPs which invest the
entire principal sum in equities.
The response to ULIPs has been impressive ever since its launch and it has brought good returns
for many investors. If you choose ULIPs you enjoy tax benefits under Sec 80C. You can also
switch between equity funds and debt funds or vice versa without fearing any entry or exit
charges as in the case of Mutual Funds. However your investment in ULIP’s will work only if
you stay invested on a long term (more than 10 years).

Have you decided to invest in ULIPs? Here’s a three-step plan to find the right ULIP for you.
12.7.2 Understand ULIPs

Gather as much information as possible on ULIPs that you are considering investing in,
understand how they work and seek advice from financial experts on potential best and worst
case returns if the need be so you don’t encounter nasty surprises later.

250 LOVELY PROFESSIONAL UNIVERSITY