Life insurance plans are a necessity in present times. Without one, your dependents can be left without any financial backup in the event of an unfortunate demise or disability. Among the several plans that can be purchased, a Unit Linked Insurance Plan (ULIP) is a unique policy offering insurance and investment in one plan. These ULIP plans invest in market-linked securities while offering life insurance coverage. Hence, they are also known as insurance-cum-investment plans.

The investments via ULIPs are made in market-linked instruments in different types of funds. Equity funds, debt funds, balanced funds, liquid funds, and cash funds are some of them. The fund value at any point during the policy tenure is calculated by multiplying the number of units by the price of each unit. The price of each unit is defined by NAV (Net Asset Value) and is based on the prevailing market conditions.

This …