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The main difference is in the flexibility in the choice of investments. In the case of unit-linked life insurance, the insurance company would usually offer a choice of different funds (say, with a differential mix of bond and equity investments) in which the policyholder can opt to invest his/her contributions. These funds differ by virtue of their risk exposure and their appreciation potential. The policyholder can decide which funds his/her contributions need to be invested in and in what proportion. Therefore, the returns under the policy are dependent on the investment choice made by the policyholder. The policyholder can also opt to invest top-up contributions over and above the regular contributions at any time and to switch his/her investment pattern at any time during the term of the policy. In the case of traditional life insurance, the policyholder is usually offered a guaranteed sum assured
In addition, non-guaranteed bonuses in the form of a share in the profits of the Company may also be offered depending on whether the policy is a participating policy or not. The policyholder has no say in the choice of investments, which are decided by the company on his/her behalf. The premium amounts are usually fixed at the outset and the same quantum of premium needs to be paid throughout the term of the policy. |
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A customer may select any investment fund or combination of investment funds as per his / her choice or can do so in consultation with an investment advisor, keeping in view the following factors:
- Financial goal
- Time period
- Risk appetite
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Risk appetite refers to the risk tolerance ability of the individual. If by nature, one is conservative and averse to taking risks, selection of investment funds with lower risks, such as Secured Funds/Balanced Funds, may be appropriate.. If one is enterprising and willing to take calculated risk, selection of funds with relatively high-risk exposure, such as Growth Funds, may be appropriate, thereby providing an opportunity for higher returns to the policyholder.
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Any investment fund may be selected at any point of time by the policyholder
It is possible for the policyholder to shift from one investment fund to another depending upon market conditions
Value of investment fund can appreciate faster if smart and timely choices are made
Yes, a smart customer can make more money by appropriately switching his/her contribution among the various investment funds offered by the policyholder. This switching facility is provided in a Unit Linked Policy. |
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Generally, 3 to 5. |
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No. The insurance company would usually offer a choice of different investment funds and the policyholder may opt to invest his/her contributions amongst the offered investment funds in any desired proportion. |
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The Policyholder is required to specify his choice of investment fund while proposing for a unit-linked life insurance policy. Choice of investment fund has to be indicated in the Proposal Form. |
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Yes, the choice of investment fund can be changed at any desired later date. |
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Yes. The policyholder can specify the proportion in which his/her contribution is to be appropriated among the various investment funds. |
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Shifting of investment from one investment fund to another is also called switching. It is possible for the policyholder to switch across all funds offered by the insurance company in any desired proportion. |
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In the case of ING Life Freedom Plan and ING Life Future Perfect Plan, two switches per policy year are offered free of switching charges. Any additional switches will be subject to switching charges as stated in the terms of the policy. The number of free switches offered and other switching conditions may vary across different insurance companies and different insurance products. |
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Future premiums can be redirected into any investment fund in any proportion without shifting existing investments in any investment fund. |
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No, the top-up contribution does not affect the basic insurance amount (sum assured) under the policy. The top-up contribution however, adds up to the benefit, which is available to the policyholder, upon maturity of the policy. |
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No, decision to invest in specific securities will be taken by the Fund Manager of the insurance company in accordance with the investment mandate. |
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The insurance company usually provides investment information at periodic intervals through news bulletins etc. |
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No loan is available under the unit-linked life insurance products offered by IVL. |
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Currently no riders can be attached to our individual unit-linked plans. |
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Yes, it can be surrendered based on the terms and conditions of the unit linked life insurance policy. Surrender is generally allowed in the second year of the policy. |
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Yes. Nomination can be changed at any time before the maturity date. The change needs to be intimated to the company through a specified form. |
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The policy can be assigned. To assign the policy, the policyholder has to notify the Company. Assignment has the effect of nullifying the nomination in the policy. |
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To process a maturity claim you need to submit the following-
- Completed claim form
- Policy of Life assurance in original
- Proof of age, if not submitted earlier
- Other forms as required by the company
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Unless the policy has been assigned, in which case the death claim is payable to the assignee, in other cases the death claim is paid to-
- The nominee, as declared in the proposal form
- The legal heirs, in case the nominee is not specified
- The appointee, in case where the nominee is a minor at the time of claim
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In case of a death claim, the ‘claimant’ (nominee/ legal heirs) must submit-
- An intimation of the death of the life assured
- Death certificate issued by the local health and medical authority
- Completed claim forms
- Policy of Life assurance
- Medical evidence in case of health and disability rider claims
- Other forms as required by the company
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A policyholder has an option to contribute additional amounts over and above the regular premium payable under the unit linked life insurance plan. These Top-ups do not alter the original sum assured under the Policy. However, top-up amount allows the policyholder to increase his investment and savings at his own pace. |
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The regular premium paid by the policyholder is eligible for tax rebate under Sec. 88 of the Income Tax Act, 1961. Also, benefits paid under the life insurance policy are exempt from tax under Sec. 10 (10) (D) of the Income Tax Act, 1961. However, under this plan, if in any year, the sum of top-up amount and regular premium exceeds 20 percent of the sum assured, the tax benefits will not be available on such excess sum. |
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Survival Benefit is the benefit the policyholder is eligible to avail upon the life assured surviving certain number of years during the term of the Policy. The survival benefit is required to be availed within five years of its falling due. Availing of survival benefits will not reduce the life insurance cover under the policy. .
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