What is Unit Linked Pension Plan?

The insurance companies in India, over the years, have launched different policies to cater to the various insurance and investment needs of the different people. One such insurance policy that has gained immense popularity recently is the ULPP – Unit Linked Pension Plan. If you want to invest in unit-linked policies, based on your risk profile, you have the liberty to invest 100% funds in equites or debt funds. You can also invest in a combination of debt and equity funds.

Features of ULPP

  • The minimum age limit for investing in ULPP is 35 years and the maximum limit is 70.
  • The payment term will be same for the policy term you choose. The policy term you choose must be in the multiples of 5 years; it can vary from 5 years to 30 years.
  • When you first start investing in ULPP, during the initial years, the premium allocation will be low and it will gradually increase in the later years.
  • As an investor in ULPP scheme, you will have to bear the fund management expense, which typically ranges between 1% to 1.35%
  • If you want guaranteed returns from your investment in ULPP, the insurance company charges a fee of 0.4% to 0.5% of the investment for guaranteed returns.
  • One of the most important reasons why a lot of people prefer investing in ULPP is that it offers a guaranteed maturity benefit between 101% and 195%.
  • In the event of the death of the investor before the end of the investment term, the guaranteed death benefit offered to the investor will be as per the terms and condition of the insurance company. In most cases, the death benefit paid is more than the premium paid by the investor.

Based on your financial goal and investment objective, you can invest in ULPPs for child education, health benefits, retirement and wealth creation. If you choose a policy for pension, the premium amount will be directly from the salary of the employer. You can also choose a systematic investment plan (SIP) so that you can increase or decrease the monthly premium as per your convenience.

Many investment experts suggest that it is best to start investing in the ULPP as soon as you start earning; whilst you are young, you can invest in high-risk plans so that you have the leverage and accomplish your wealth accumulation goals over a period. With the duration of a typical pension plan being 15 years or more, you can build a robust retirement corpus.

Learn more about your Pension Plans here.


The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.

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