Unit Linked Insurance Plans, better known as ULIPs, are a product offering from insurance companies that provide a ‘Combo’ of investment and insurance. The underlying investment funds offered by ULIPs are similar to that of mutual funds. ULIPs are a combination of investments and insurance. Every ULIP policy has a minimum premium amount and a premium payment term. The sum assured is a multiple of the premium amount. You may choose to make a Single Payment or Regular Payment over the policy term. The policy term ranges from a minimum period of 5 years to as much as 20 years. Every premium you pay, part of it is deducted towards the insurance cover, which is the mortality cost. Apart from this, other charges in the form of Administration Charges and Premium Allocation Charges are deducted. The resultant premium is then invested in the funds selected. Therefore, ULIP has its of underlying funds that have a predefined investment strategy. You may invest in a single fund or divide your investment across multiple funds based on your risk profile.