In this video, we discuss an important feature of unit linked insurance plan (ULIPs) called top up
ULIPs are flexible life insurance plans and they are market linked
Policyholder gets units and the sum assured is in the form of units. The price of units changes with the market. At any point, one check the investment value
In some ULIPs, the sum insured is the higher of the sum insured or the fund value
There is another category of ULIP, where the sum insured is separate for death plus whatever is the fund value
Coming to ULIP top up, over time you might more savings that the regular ULIP premium for a particular financial year
Instead of buying another plan or the case maybe that the savings may not be enough to buy another plan but the savings need to be deployed
In the existing ULIP, you can invest more. This additional investment is called ULIP top up
In an ULIP plan you would have chosen an allocation to various ULIP funds such as equity fund, debt fund and money market fund
The top up investment in ULIP will be deployed according to the existing proportion of allocation to different funds
According to insurance regulator, IRDA, in case the top-up involves an increase of 25% or more of the existing premium, it has to be accompanied by an increase in death benefit in the same proportion
Also, you can not avail the top facility if you have missed out on paying your regular premium
Some life insurance companies accept upto 100% of the premium as top ups
Over time, your income is going up and you get lump sums such as pay hikes, increments, bonus and refund