What are the various charges in ULIPs?

The charges in ULIP have varying structures depending upon the guideline of IRDAI. Below stated are some charges that you will have to pay after buying a ULIP policy:

• Premium Allocation Charge: Premium allocation charges are paid over a percentage of annualized premiums. Premiums paid by you are invested into the funds of your choice post deduction of allocation charge. Premium Allocation charge varies from plan to plan- it could be zero,or it could be as high as 5-8%.
• Policy Administration Charge: Expressed as a percentage of annualized premium per month. The administration charges are deducted from the unit account on a monthly basis.
• Discontinuance Charge: If an insured person wishes to discontinue the policy the following charges are applied;

  For Annual Premium
  Where the policy is discontinued during the policy year	Maximum Discontinuance charges for the policies having annualized premium upto Rs 25,000	Maximum Discontinuance charges for the policies having an annualizedpremium above Rs 25,000
  1	Lower of 20% * (AP or FV/policy account value) subject to a maximum of Rs. 3000	Lower of 6% * (AP or FV/policy account value) subject to a maximum of Rs. 6000
  2	Lower of 15% * (AP or FV/policy account value) subject to a maximum of Rs. 2000	Lower of 4% * (AP or FV/policy account value) subject to a maximum of Rs.5000
  3	Lower of 10% * (AP or FV/policy account value) subject to a maximum of Rs. 1500	Lower of 3% * (AP or FV/policy account value) subject to a maximum of Rs, 4000
  4	Lower of 5% * (AP or FV/policy account value) subject to a maximum of Rs. 1000	Lower of 2% * (AP or FV/policy account value) subject to a maximum of Rs. 2000
  5 and onwards	Nil	Nil

  For Single Premium
  Where the policy is discontinued during the policy year	Maximum Discontinuance charges for the policies having annualized premium upto Rs 25,000	Maximum Discontinuance charges for the policies having an annualizedpremium above Rs 25,000
  1	Lower of 2% *(SP or FV/policy account value) subject to a maximum of Rs.3000/-	Lower of 1% *(SP or FV/policy account value) subject to a maximum of Rs.6000/-
  2	Lower of 1.5% *(SP or FV/policy account value) subject to a maximum of Rs.2000/-	Lower of 0.5% NSF' or FV/policy account value) subject to a maximum of Rs.5000/-
  3	Lower of 1% *(5P or FV/policy account value) subject to a maximum of Rs.1500/-	Lower of 0.25% *(SP or FV/policy account value) subject to a maximum of Rs.4000/
  4	Lower of 0.5% *(SP or FV/policy account value) subject to a maximum of Rs.1000/-	Lower of 0.1% *(SP or FV/policy account value) subject to a maximum of Rs.2000/-
  5 and onwards	Nil	Nil
  AP- Annualized Premium SP-Single Premium FV- Fund Value

• Miscellaneous Charge:For transactions such as switching, premium re-direction, partial withdrawal, etc. A plan may allow a certain number of free limits,e.g. 12 free switches in a year. Post the limit of free transactions, a defined charge per transaction may be levied.
• Mortality Charge: These charges are determined by using 1/12th of annual mortality charge and is deducted from the unit account on a monthly basis. The charges are levied on the sum at risk.