The Main Features of a Balanced Fund in a ULIP

The Main Features of a Balanced Fund in a ULIP

Last Updated: Mon, Apr 22, 2013 10:23 hrs
​life insurance

A ULIP is an insurance tool that allows you to insure as well as invest. The money you pay as premium is divided into sections and after deduction of the various fees, an insurance component is kept aside. This money is not invested. The other part is invested in the market in the form of various funds such as balanced funds, cash funds, equity fund, etc. Each fund has a different risk factor and you must be aware of these before you select the fund. The risk is highest in an equity fund and lowest in a cash fund. The risk is considered to be medium in a balanced fund. As a result, many people opt for a balanced find when investing in a ULIP.

What is a balanced fund in a ULIP?

A balanced fund is a kind of fund in ULIPs where equity investments are combined together with instruments of fixed interest. As already mentioned, the risk is medium. Take a look at the features of a balanced fund:

  1. A balanced ULIP has 60% investment in equity and 40% investment in the debt market.

  2. It provides adequate cover and protection for you and your family, as a considerable amount of the premium you pay is put away in an insurance fund that is not invested in the market.

  3. The length of the term and the premium you pay determine the sum assured. For 10 and 15 year policies, usually the sum assured is 10 times the annualized funds, and for a 20 year policy, the sum assured will be 15 times the annualized fund

  4. Apart from the sum assured, you will get market related returns. At the time of maturity of the ULIP, you will be entitled to receive the fund value.

  5. You can invest in a balanced fund if you are above 18 years and below 60 years. The age limits sometimes vary from company to company, but roughly it is in this bracket. You have to boost of a good health while opting for a balanced fund.

  6. Additional features, such as top-up premiums are available. So if at any time during the term of the ULIP you have some extra money to spare, you can invest it in your balanced fund.

  7. The regular charges that are applicable to ULIPs are applicable here too. Such charges include premium allocation charges and surrender charges.

  8. You will be entitled to a tax benefit under 80C and 10 (10D) of Income Tax Act of India.
So now that you know the basic features of a balanced fund in a ULIP, you will be in a better position to decide whether you want to go for this kind of a fund or not. Investing in a balanced fund is definitely wise.

However, you must remember that often companies change their individual offers related to the ULIP, and though the above mentioned points roughly cover all the ULIPs, you must read the offer documents carefully before investing. This will give you a fair idea of the exact numbers and details related to the ULIP.

Deepak Yohannan Deepak

The author of the article, Deepak Yohannan, is CEO of, India’s first Web Aggregator for insurance products approved by the Insurance Regulatory and Development Authority (IRDA).

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