Not to forget, with the new rules per se ULIPs some of the charges and commission rates have been pegged with an upper limit while in some of the ULIP policies being sold online no commission charges or fees apply.
Further all such charges on ULIPs vary from insurer and insurer and on their on discretion these rates are revised time and again. So, here is detailed all the fees and charges i.e. deducted from the insured's premium towards a particular account :
1. Premium Allocation charge: Before the allocation of units under the ULIP scheme, ULIP policyholder is charged the premium allocation charge as a % of the premium amount towards different charges. The charged amount is for the initial as well as renewal expenses plus the commission charges.
2. Mortality charges: For the provided insurance coverage under the policy plan, this charge which is determined considering different factors such as the age of the insured, health condition and insurance cover, is deducted in ULIP plans also.
3. Policy Administration charges: Charged at a constant or differential rate through the policy term, such a charge is levied for the administration of the policy and is adjusted by canceling units held by the insured.
4. Fund Management fees: For the management of the fund, such a fee is deducted before deciding the final net asset value (NAV) for the fund.
5. Switching fund charges: When the investor in the ULIP transfers funds in the ULIP account to a different fund free switches allowed under the ULIP have exhausted is charged a certain sum as fund switching charges or fees.
6. Surrender charges: Based on the policy terms and conditions, ULIPs deduct some fees as surrender charges from the fund value to arrive at the final surrender value payable to the insured.
Besides, all such charges, service tax from the premium portion appropriated towards the risk is also deducted before units under the plan are allocated. It is after all such deductions are made, policyholder is allotted the units with the remaining policy premium amount.
Information courtesy: IRDA website