Multiple choice

What is/are the charge(s) in a ULIP?

  1. Policy Allocation Charge

  2. Mortality charge

  3. Both 1 and 2

  4. Neither 1 nor 2
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The premium of ULIP is divided into three parts: a) Firstly, there is a policy allocation charge (PAC) which is comprised of agents’ commission, policy setup costs, administrative costs and statutory levies. b) The second component is the mortality charge which is the cost of providing risk cover. c) The balance of premiums after meeting the above two are allocated for the purchase of units. 

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