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ULIP also referred to as the Unit Linked Insurance Plan is an investment cum insurance plan that provides the borrowers with insurance payout benefits such as education, retirement, life insurance, etc. In ULIP, the policyholder can pay the premium amount in monthly or annually basis. A part of the premium is used for the life insurance security and the rest amount is invested like a mutual fund. It is usually opened by an investor who seeks to provide the beneficiaries with coverage. The amount is paid by the owner in the form of premiums along with an intention to pay out the plan’s worth in a specified time frame.

The policyholder accumulates the units by making an investment through the policy terms that is 5 years, 10 years or 15 years. The amount of premiums depends on the terms of each ULIP. The payments of the premium are equally invested in the designated investments towards the specified coverage. ULIP investors can make certain changes to the fund preferences throughout the term of the investment. It also offers various investment options such as bond funds, stock funds, and diversified funds. ULIP allow for the coverage of the insurance policy along with premium payments assigned to funds that will increase the market rates over the passage of time.