A Unit Linked Insurance Plan or ULIP as it is popularly called is a combination of insurance and investment. While the ULIP does not provide you with as great an insurance as a term policy would, it does provide with a an insurance cover, while also an investment opportunity.
Each of them would have different charges and could also differ from the company where you take the policy.
Insurers tend to differ in the charges and they can undergo a change over a period of time.
a) Premium Allocation Charges
This is a portion of the premium that is allocated towards various expenses that are incurred including commission charges, renewal expenses etc.
b) Mortality Charges
These are once again the charges that are incurred for providing coverage under the plan. These depend on factors such as the age of an individual, his condition of health, the coverage etc.
c) Fund Management Fees
Fund management fees are the charges that are deducted from managing the fund. These are generally deducted from the net asset value.
d) Service Tax Deductions
This is a charge that you cannot escape and you need to make good. Service charges were recently hiked in the Union Budget 2015-16 and are now payable at a higher rate in excess of 14 per cent.
e) Fund switching charge
In case you are looking to switch from one fund to another there would be a charge that is payable. It's therefore important before buying a fund to carefully choose the same or else you would be without reason be paying a higher charge.
Before investing it's always good to examine the various charges that are applicable.