Unit Linked Insurance Plans

A unit linked insurance plan is a type of life insurance product that combines a death benefit and an investment component. Unlike similar life insurance plans, these plans are valued in individual units instead of by total cash value. This type of plan can provide individuals with a way to invest and protect their families at the same time. Here are the basics of the unit linked insurance plan.

Unit Linked Insurance

With this type of insurance plan, you will be able to invest in different funds. The units that you can purchase are based on the net asset value of these funds. The value of the units will fluctuate on a daily basis depending on the underlying value of the securities owned by the fund. This is a very similar arrangement to investing in a regular mutual fund except that you have a death benefit as well. 


One of the big advantages of this type of insurance plan is that it is transparent. With many other life insurance plans, an individual does not know how much of her money is going to investing and how much is going to the death benefit. With a unit linked insurance plan, you get to see everything that is going on with your money. You can see what types of investments your money is going to, and you can see the exact value of those investments. This makes it much simpler compared to other plans, and many people prefer this method.


When you get involved with a unit linked plan, you will have options to choose from. Insurance carriers will give you the option of investing in a plan that focuses on debt, one that focuses on equity or one that uses a balanced mixture of the two. This allows you to choose an investment strategy that is more in line with your individual investment goals. 

Tax Advantages

One of the advantages of this type of product is that it is tax exempt. Any money that you earn from returns on your investments stays in the insurance account. Because you will not have to pay any taxes on the money earned, the cash value of your account will increase more rapidly than would normally be the case with a standard investment account. When you do not have to pay taxes, you get to keep more of your money in investments. 

Switching Funds

When you invest in this type of policy, you will have the option of switching your money into any fund that you choose. This will allow you to move from one fund to another without having to pay fees, as you would with a traditional investment arrangement. This allows you to keep more of your money and choose investment strategies with which you feel comfortable. You could easily move from a debt investment structure to an equity one. 

blog comments powered by Disqus