How Does a ULIP Work?

 A ULIP (Unit Linked Insurance Plan) works by splitting your premium into two key components, offering both financial protection and investment growth. This dual structure ensures that a part of your money goes towards securing your family's future, while the rest is invested to help you build wealth over time. Here's how the two components function:

Life Insurance Component:

Component: A portion of your premium is allocated to provide life cover, ensuring financial protection for your family in case of an unfortunate event.

Investment Component:

The remaining portion is invested in financial markets, giving you market-linked returns along with the flexibility to choose between equity, debt, or hybrid funds based on your risk appetite. You can also switch between funds to optimize returns as market conditions evolve.

To understand how a ULIP works in real life, let’s look at Sunita’s story. Her example shows how a ULIP can help you grow your money while also giving life cover.