Unit Linked Insurance plans (ULIP) are considered as an excellent way to benefit from market upswing while also being protected with a life. While investing in a unit linked insurance plan, it is beneficial to take a look at all the charges in such plans. For a ULIP, insurers deduct specific premium amount for life cover before allotting the amount to the units. The charges may vary depending on the insurance companies and different types of ULIP plans. However, there are some types of charges in ULIP that remain constant irrespective of this.

Here are some common types of charges that you must know if you are thinking of investing in a ULIP policy.  

1. Premium Allocation Charge
   Premium allocation charge is a fixed percentage of premium, which is deducted from your premium amount.
2. Mortality charges
   This charge is levied for your insurance coverage under the ULIP plan. Mortality charges depend on several factors such as age, sum assured and are deducted every month. 
3. Fund management charge
   Fund management charges are the fees levied by insurance companies to manage ULIP funds. The maximum charge insurance companies can levy is 1.35 percent of the fund value. For equity-oriented funds, the charge levied will be higher than for debt oriented funds in your plan. 
4. Policy administration charge
   This charge is a fee for administering your ULIP policy. This charge is levied every month and could be a fixed charge or variable. 
5. Premium discontinuance charge
   When you discontinue your premiums in the initial five years (lock-in period), your funds will be allocated to the discontinuance policy fund, and payable to you after the lock-in period is over. For discontinuance during the lock-in, a discontinuance charge is applicable. If you discontinue ulip policy after 5 years, you won’t be charged a surrender fee.

Find out more about the benefits of ulip policies, as well as the best ulip plans available at PNB MetLife.

To Sum

If you are worried that your yield will reduce because of these charges, then do not worry as the regulator has a cap for the maximum reduction in yields. Now that you know about all the charges in ULIP that affect your yields, decide how much percentage of your income must get invested in ULIPs. 

To know more about term plan, life insurance , term insurance, long term savings visit PNB MetLife website.