India Insurance - Unit Linked Insurance Plan (ulip nav)

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India Insurance - Unit Linked Insurance Plan
(ULIP)
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• In India, Unit Linked Insurance Policies (ULIPs)
  are insurance policies that combine risk coverage
  with investing in the stock/debt markets. In
  effect, they are designed to behave as normal
  insurance policies plus mutual funds.
• An investor's contribution to ULIPs gets invested
  in specific types of portfolios that he/she
  chooses. The policy typically pays back based on
  market returns on investments at the end of the
  insured period. Therefore, it forms an
  interesting savings instrument that can get good
  risk cover.

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• Features of ULIPs include
• 1. Units allotted under ULIP schemes have Net
  Asset Values (NAV) declared regularly, like a
  mutual fund
• 2. Investors can invest across types of
  portfolios similar to mutual funds - growth
  equity, balanced, debt funds, etc. Investors can
  move across portfolios, typically at nominal
  costs
• 3. Investors can invest as a lump sum (single
  premium) or make premium payments on an annual,
  half-yearly, quarterly or monthly basis. Premium
  amounts can be changed over the course of ULIP's
  life

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• 4. Investments qualify under Section 80C of the
  Income Tax Act. Maturity proceeds from ULIP NAV
  are tax free. There are no long term capital
  gains tax and 10 short term capital gains tax on
  equity portfolios within ULIP. For debt funds,
  long term capital gains tax is 10 while short
  term is at the investor's marginal tax rate.
• 5. However, charges charged by insurance
  companies can be quite confusing - therefore,
  investors should compare them with similar mutual
  funds to see if charges quoted are reasonable.
• Despite their interesting structure and potential
  benefits, investors are better off clearly
  understanding portfolio types offered,
  performance of fund managers and expenses/fees
  before investing in ULIPs.
• Article Source http//EzineArticles.com/873514

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