A Unit Linked Insurance Plan, or ULIP, is a market-linked insurance product that seeks to aggregate investment and insurance options optimally. This product is linked to the capital market and offers flexibility (such as providing risk cover for the policyholder) along with options to invest in any number of stocks, bonds or mutual funds (indicated in units), as per the risk-taking ability of the investor/insured. Thus, a young individual with high risk tolerance for high ULIP returns can opt for a high-risk, high-return strategy of investing primarily in equities. Alternately, one can opt for a combination of equity, debt and money market investments to get high returns with minimal risks.

Overall, this product sure opens up interesting options for investors, though it goes without saying that they should also make it a point to be aware of the varying associated ULIP charges and cost structures involved.