Unit Linked Insurance Plan is a unique product issued by Insurance companies that combines insurance and investment in a single offering. A part of the premium is utilized for providing insurance coverage to the policy holder and the rest is invested in a pool of assets like equity shares or debt securities, or both. The investment part of a ULIP is much like a Mutual Fund. The main advantage of a ULIP is indeed its flexibility. It could be used for life insurance, meeting retirement income, education expenses etc. Most of the Unit Linked Insurance Plans provide the investors with the facility to switch funds across different funds which belong to different risk categories and sometimes different asset classes.
Unit Linked Insurance Plans are typical for long-term investments. Partial withdrawals are allowed and returns are tax-free. But some products seem to be expensive and complex .ULIPs are typical for young investors who have a higher risk-return appetite.