The product is a very flexible product combining all the merits of traditional plans. I.e. term Plan, Endowment Plan, Moneyback plan. The withdrawal option is provided after 5 years.Then comes the real picture about charges. The customer must observe the offer document carefully.Ask for an illustration and inspect it. It is a misconception that when a company charges less premium allocation charge, it is good. The company makes it up by charging more in policy administration charges.Fund Management charges are compounded daily. So they go on increasing with the fund value.Look for less FMC.
The fund performance in market is another important criteria which is overlooked.The customer must have some knowledge about share market. and debt market. Then he will understand the Fund switching concept. Some ULIPS are sold by telling that they offer the Guaranteed NAV. Stay away from them.The IRDA has revised the charges from 01.01.2010. It is a good news. But remember that ULIP is a fancy product. Buy a term plan for your Insurance needs and then only think about ULIP if you do not have any liability.
Do not buy it just to save tax. ULIP can be considered as an insurance option for a period exceeding 10 years.