What is a 'Unit Linked Insurance Plan - ULIP'
A unit linked insurance plan (ULIP) is a type of insurance vehicle in which the policyholder purchases units at their net asset values and also makes contributions toward another investment vehicle. Unit linked insurance plans allow for the coverage of an insurance policy, and provide the option to invest in any number of qualified investments, such as stock, bonds or mutual funds.
BREAKING DOWN 'Unit Linked Insurance Plan - ULIP'
A unit linked insurance plan acts just like a savings vehicle, but also has the benefits of an insurance contract. When an investor purchases units in a ULIP, he or she is purchasing units along with a larger number of investors, just like an investor would purchase units in a mutual fund.
Different ULIPs offer different qualified investments. Be sure to read the plan's prospectus before purchasing any ULIP.