The correct answer is: D. All of the above
Unit-linked plans are a type of life insurance policy that allows you to invest your premiums in a variety of underlying assets, such as stocks, bonds, and mutual funds. The value of your policy will fluctuate based on the performance of these underlying assets.
Traditional life insurance policies, on the other hand, are not invested in the stock market. Instead, they are funded by a fixed premium that you pay each month or year. The death benefit of a traditional life insurance policy is also fixed, regardless of how the stock market performs.
There are several advantages of unit-linked plans over traditional life insurance policies:
- Transparent charges structure: Unit-linked plans typically have a more transparent charges structure than traditional life insurance policies. This means that you are more likely to understand how much you are paying in fees and charges.
- Value of the units related to an index of performance: The value of the units in a unit-linked plan is related to an index of performance, such as the S&P 500. This means that your investment has the potential to grow at a faster rate than a traditional life insurance policy.
- Both premium and sum insured (as a multiple of annual premium) decided by the insured: In a unit-linked plan, you can choose the amount of premium you want to pay each month or year. You can also choose the amount of sum insured, which is the amount of money that will be paid out to your beneficiaries if you die. This flexibility is not available with traditional life insurance policies.
Overall, unit-linked plans offer several advantages over traditional life insurance policies. If you are looking for a policy with a transparent charges structure, the potential for higher returns, and the flexibility to choose your own premium and sum insured, then a unit-linked plan may be a good option for you.