A ULIP is Unit-Linked Insurance Plan. It is a life insurance policy with an investment component that is invested in various financial markets. The returns generated by the investment component determine the value of the policy. However, the sum assured on the death of the policy holder may not be a function of the market – the minimum sum assured may remain unaffected. In other words, a ULIP is a hybrid product, combining investment and insurance.
The investment component of ULIP is similar to a Mutual Fund.
1. Both are managed investments.
2. For both, a team of professionals manages the investments and the funds are invested in line with a stated objective.
3. There would be units allotted to the investor on purchase and there would be NAV per unit declared
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