Some FAQ’s on Unit Linked Insurance Polices (ULIPS) & Traditional pPolicies

1. What is a ULIP?

ULIP is an abbreviation for Unit Linked Insurance Policy. A ULIP is a life insurance policy which provides a combination of risk cover and investment. The dynamics of the capital market have a direct bearing on the performance of the ULIPs. REMEMBER THAT IN A UNIT LINKED POLICY, THE INVESTMENT RISK IS GENERALLY BORNE BY THE INVESTOR.

2. What is a Unit Fund?

The allocated (invested) portions of the premiums after deducting for all the charges and premium for risk cover under all policies in a particular fund as chosen by the policy holders are pooled together to form a Unit fund.

3. What is a Unit?

It is a component of the Fund in a Unit Linked Policy. 4. What Types of Funds do ULIP Offer?

Most insurers offer a wide range of funds to suit one’s investment objectives, risk profile and time horizons. Different funds have different risk profiles. The potential for returns also varies from fund to fund.

The following are some of the common types of funds available along with an indication of their risk characteristics.

Primarily invested in company stocks with the general aim of capital appreciation

Invested in corporate bonds, government securities and other fixed income instruments sometimes known as Money Market Funds — invested in cash, bank deposits and money market instruments

5. Are Investment Returns Guaranteed in a ULIP?

Investment returns from ULIP may not be guaranteed.” In unit linked products/policies, the investment risk in investment portfolio is borne by the policy holder”. Depending upon the performance of the unit linked fund(s) chosen; the policyholder may achieve gains or losses on his/her investments. It should also be noted that the past returns of a fund are not necessarily indicative of the future performance of the fund.

6. What are the Charges, fees and deductions in a ULIP?

ULIPs offered by different insurers have varying charge structures. Broadly, the different types of fees and charges are given below. However, it may be noted that insurers have the right to revise fees and charges over a period.



6.1 Premium Allocation Charge

This is a percentage of the premium appropriated towards charges before allocating the units under the policy. This charge normally includes initial and renewal expenses apart from commission expenses.

6.2 Mortality Charges

These are charges to provide for the cost of insurance coverage under the plan. Mortality charges depend on number of factors such as age, amount of coverage, state of health etc

6.3 Fund Management Fees

These are fees levied for management of the fund(s) and are deducted before arriving at the Net Asset Value (NAV).

6.4 Policy/ Administration Charges

These are the fees for administration of the plan and levied by cancellation of units. This could be flat throughout the policy term or vary at a pre-determined rate.

6.5 Surrender Charges

A surrender charge may be deducted for premature partial or full encashment of units wherever applicable, as mentioned in the policy conditions.

6.6 Fund Switching Charge

Generally, a limited number of fund switches may be allowed each year without charge, with subsequent switches, subject to a charge.

6.7 Service Tax Deductions

Before allotment of the units, the applicable service tax is deducted from the risk portion of the premium.

Investors may note, that the portion of the premium after deducting for all charges and premium for risk cover is utilized for purchasing units



7. What should one verify before signing the proposal?

One has to verify the approved sales brochure for

• All the charges deductible under the policy

• Payment on premature surrender

• Features and benefits

• Limitations and exclusions

• Lapsation and its consequences

• Other disclosures

• Illustration projecting benefits payable in two scenarios of 6% and 10% returns as prescribed by the life insurance council.



8. How much of the premium is used to purchase units?

The full amount of premium paid is not allocated to purchase units. Insurers allot units on the portion of the premium remaining after providing for various charges, fees and deductions. However the quantum of premium used to purchase units varies from product to product.

The total monetary value of the units allocated is invariably less than the amount of premium paid because the charges are first deducted from the premium collected and the remaining amount is used for allocating units.

9. Can one seek refund of premiums if not satisfied with the policy, after purchasing it?

The policyholder can seek refund of premiums if he disagrees with the terms and conditions of the policy, within 15 days of receipt of the policy document (Free Look period). The policyholder shall be refunded the fund value including charges levied through cancellation of units subject to deduction of expenses towards medical examination, stamp duty and proportionate risk premium for the period of cover.


10. What is Net Asset Value (NAV)?

NAV is the value of each unit of the fund on a given day. The NAV of each fund is displayed on the website of the respective insurers.

11. What is the benefit payable in the event of risk occurring during the term of the policy?

The Sum Assured and/or value of the fund units is normally payable to the beneficiaries in the event of risk to the life assured during the term as per the policy conditions.

12. What is the benefit payable on the maturity of the policy?

The value of the fund units with bonuses, if any is payable on maturity of the policy.

13. Is it possible to invest additional contribution above the regular premium?

Yes, one can invest additional contribution over and above the regular premiums as per their choice subject to the feature being available in the product. This facility is known as “TOP UP” facility.

14. Whether one can switch the investment fund after taking a ULIP policy?

Yes. “SWITCH” option provides for shifting the investments in a policy from one fund to another provided the feature is available in the product. While a specified number of switches are generally effected free of cost, a fee is charged for switches made beyond the specified number.

15. Can a partial encashment/withdrawal be made?

Yes, Products may have the “Partial Withdrawal” option, which facilitates withdrawal of a portion of the investment in the policy. This is done through cancellation of a part of units.

16. What happens if payment of premiums is discontinued?

a) Discontinuance within three years of commencement – If not all the premiums have been paid for at least three consecutive years from inception, the insurance cover shall cease immediately. Insurers may give an opportunity for revival within the period allowed; if the policy is not revived within that period, surrender value shall be paid at the end of third policy anniversary or at the end of the period allowed for revival, whichever is later.


b) Discontinuance after three years of commencement — at the end of the period allowed for revival, the contract should be terminated by paying the surrender value. The insurer may offer to continue the insurance cover, if so opted for by the policyholder, levying appropriate charges until the fund value is not less than one full year’s premium. When the fund value reaches an amount equivalent to one full year’s premium, the contract shall be terminated by paying the fund value.



17. What information related to investments is provided by the Insurer to the policyholder?

The Insurers are obliged to send an annual report, covering the fund performance during previous financial year in relation to the economic scenario, market developments etc. which should include fund performance analysis, investment portfolio of the fund, investment strategies and risk control measures adopted.


What is a term assurance?

Term assurances are the purest and cheapest form of insurance. Term assurances are plans where benefits are payable only on the death of the policyholder within the term.

What is whole life plan?

Whole life plans are a special type of term assurance wherein the term of the policy is whole of the life. So it follows that benefits under the policy are payable only on death of the policy holder.


What is an endowment assurance plan?

Endowment plans are among the most popular forms of insurance as they provide both insurance coverage and act as a savings instrument. These are the plans wherein benefits are payable on death within the term or survival to maturity whichever is earlier.

What is money back plan?

Money back plans are a special type of endowment plans and are called as anticipated endowment assurance plans. Under money back plans, survival benefits are spread over the term of the policy i.e., certain percentage of sum assured is paid at regular intervals. Apart from the above death benefit continues like an endowment plan i.e., full sum assured shall be payable on death within the term irrespective of earlier survival benefits.

What is an assignment?

Assignment is a means whereby the beneficial interest, right and title under a policy gets transferred from the assignor to the assignee. ‘Assignor’ is the policyholder who transfers the title and ‘Assignee’ is the person who derives the title from the assignor.

When to assign a policy

Assignment can be made only after acquiring the policy. Assignment can be done only for consideration- for money or money’s worth or good, moral and meritorious consideration like, love and affection.


Procedure to assign a policy

Assignment can be done by mere endorsement on the policy or by a separate duly stamped deed. The proposer, policyholder, or the absolute assignee can do assignment.


Pre-requisites for a valid assignment

Assignor must be a major. Assignor must have an absolute right over the policy. Assignment must be in writing. Assignor’s signature along with a witness is a must. Notice of assignment is to be submitted to the insurer.

Types of assignments

There are two kinds of assignments.

» Conditional Assignment

» Absolute Assignment

Conditional assignment is usually effected for consideration of natural love and affection. Absolute assignment is usually affected for valuable consideration.

The rights of an assignor and assignee

On assigning the policy, the assignor (life assured/policy holder) loses his right over the policy and the assignee gets the right and becomes the owner of the policy. The assignee can further re-assign the policy and he has a right to sue under the policy.

A valid Assignment once made cannot be cancelled. It is only a valid assignment the earlier assignment is cancelled. In all the cases, Assignment automatically cancels the nomination. However, when the policy is assigned to the insurer, nomination gets affected and it is not cancelled.

Under conditional assignment, if the conditional assignee dies, the benefit under the policy goes back to the life assured if surviving. Otherwise, the benefit goes to policyholder’s nominee. Under absolute assignment, if the absolute assignee dies, the benefits under the policy go to the legal heirs of the assignee.

What is nomination?

Nomination is the process of identifying a person to receive the policy money in the event of the death of the Policyholder.

When to nominate

Nomination can be done at the inception of the Policy by providing details of nominee in the proposal form. However, if the nomination is not done at the inception of the policy, the policyholder can nominate later. This nomination has to be effected by giving notice in a prescribed form to the insurer and getting it endorsed on Policy Bond.

Change of Nomination

The Policyholder can do change of Nomination any time during the term of the Policy and any number of times. For this, the policyholder has to give a notice in a prescribed form to the insurer and getting it endorsed at the back of the Policy. Further, the Policyholder can remove Nomination any time without giving prior notice to the Nominee.

Procedure for Nomination

Only a policyholder who is a major holding Policy Bond in his own name can do nomination. In the case of Children’s Policies, Nomination is not done until the Child becomes major.

Rights of a nominee

Under Nomination, the Nominee gets only the right to receive the policy money in the event of the death of the Policyholder. Nomination does not pass on the property in the Policy. If Nominee dies when the Policyholder is still surviving then the nomination would be ineffective. Nomination has no effect if the Policyholder is surviving. If Nominee dies after the death of the policyholder but before receiving policy money, then also Nomination becomes ineffective and only the Legal Heirs of the Policyholder can claim money.

Can I take a loan on my policy ?

Policyholders are eligible to take loans on their policies subject to certain rules. The policyholder has to apply for a loan in a prescribed form and submit the Policy Bond with the form duly completed. The loan amount is calculated depending on the Surrender Value (SV) that the policy would have acquired, and approximately 85% of the Surrender Value is given as loan.

Rate of interest charged varies from company to company and time to time. A policyholder can repay the loan amount either in part or in full any time during the term of the Policy. If the loan amount is not repaid during the term of the Policy or early claim, the amount of loan plus interest, if any, will be deducted from the claim money and the balance amount will be paid to the claimant.

LIC is currently charging 10.5% interest payable half-yearly on Policy Loans. For LIC, the minimum repayment should be Rs. 50 and thereafter-in multiples of Rs. 10. If the interest is not paid regularly every half year, then the interest is calculated on compound interest basis.

If the interest is not paid regularly every half year, then the interest is calculated on compound interest basis.

How can I revive a policy?

A policy is lapsed if the premiums are not paid within the due date or the period of grace permitted by the insurance company. However, a lapsed policy can be revived and procedure varies from company to company.


In case of LIC, a lapsed policy can be revived within 5 years from the date of first unpaid premium. A policy can be revived under five different schemes.

Ordinary Revival Scheme: Under this scheme, all the arrears of unpaid premiums with interest have to be paid. Along with this, ‘Declaration of Good Health’ in Form No. 680 and medical certificate, if necessary, are required.

• Special Revival Scheme: If a person is not in a position to pay all the arrears, then, he can choose this scheme. Under this scheme, the date of commencement will be shifted so that the policy is not lapsed just prior to the date of revival, i.e., the date of commencement is advanced approximately by the period of lapse. Other requirements like those that ‘Declaration of Good Health’ and Medical certificate wherever necessary are required as in Ordinary Revival.

• Special Revival is allowed under the following conditions:

• The policy should not have acquired any surrender value.

• Revival should be within 3 years of lapse.

• Special Revival is allowed only once during policy term.


• Revival by Installment method: If a policyholder cannot pay arrears in one lump sum and if the policy cannot be revived under Special Revival Scheme, he can make use of Installment Revival Scheme. In this scheme, on the date of revival he has to pay immediately:

» 6 months premiums, if mode is Monthly

» 2 quarterly premiums, if mode is Quarterly

» 1 Half year premium, if mode is Half yearly

» Half of the yearly premium, if mode is yearly

The balance of revival amount is paid in installments spread over two years along with normal premium installments. Other requirements regarding health care, as required in Ordinary Revival Scheme.

Loan-cum-Revival Scheme: If a policy acquires surrender value on the date of revival, the policy can be revived taking a policy loan. Loan amount will be calculated treating the premiums as paid up to the date of revival. Shortfall, if any, in revival amount is called for. If loan amount is more than required for revival, the excess will be paid to the policyholder.

Survival Benefit-cum-Revival Scheme : The Survival Benefit which falls due in a money-back type of policy can be used for revival of the policy, if date of revival is later than the Survival Benefit due date. Here, if the SB amount is less than the revival amount, the short fall will be called for. If the SB is more than the revival amount, the excess is paid back to the policyholder. The other requirements for normal SB settlement and revival requirement are to be fulfilled.

What is the procedure in case of a lost policy?

The policy issued by the insurer is a valuable document and should be stored in a safe place till its maturity. In case the policy gets lost, destroyed or mutilated, then the policyholder must immediately procure a duplicate policy


The need to possess a duplicate policy arises on the following occasions:

» At the time of receiving Maturity Amount or Death claim.

»To obtain Surrender Value/Loan.

» To obtain a Duplicate Policy in other cases.

In case of LIC, the procedure involved to obtain the duplicate Policy under the above circumstances is as follows:

At the time of receiving Maturity Amount or Death, claim:

The policyholder must duly fill loss of Policy questionnaire.

» Indemnity Letter in Form No. 3815 a (unstamped) if the claim amount does not exceed Rs. 5,000 and no surety is required.

» Discharge Form is to be submitted.

» Form of Declaration of ‘No Assignment’ is to be submitted.

» A declaration by Surety having sound financial status, acceptable to LIC in appropriate Form is required, if the claim amount exceeds Rs. 5,000. To Obtain Surrender Value: Indemnity Bond in

» Form No. 3815 duly stamped and executed by the Policyholder along with Surety is to be submitted.

» Stamp Duty charges – which depend on the Surrender Value of the Policy, are to be paid.


Discharge form has to be submitted.

» Form of Declaration of ‘No Assignment’ is to be submitted.

To Obtain a Duplicate Policy in other cases:

» The Policy Document should have been lost.

» If Assigned or Mortgaged the duplicate policy shall bear the latest Assignment that is in force as on the date of issue.

» Where the Policy is due for maturity or survival benefit within 3 years and if the sum assured is more than Rs. 25,000, on advertisement in a Local Daily /newspaper having wide calculation is to be given.

» Indemnity Bond in Form No. 3756 duly stamped and executed by the policy holder on a stamp paper of appropriate value is to be submitted.

» If sum assured exceeds Rs. 50,000, declaration by Surety having sound financial status acceptable to LIC in Form No. 3807 is required.

» Duplicate Policy charges of Rs. 5 are to be paid.

» Stamp Duty charges at prevailing rates are to be paid.

What are the Tax benefits available?

Important Income Tax provisions applicable to Policyholders are:

An individual can claim rebate on premium paid on his/her life, his/her spouse, his/her children including adult children and married daughter.

Under section 88 of the Income Tax Act, certain percentage of rebate is allowed on investment in the form of insurance premium with any of the insurance company approved by IRDA. Percentage of rebate can be up to a maximum of 20% and varies depending upon the tax bracket one falls. This rebate is deductible from the tax payable by the individual. The total amount of investment in the form of insurance premium and other specified investments like PPF, NSC, etc. is restricted to Rs. 60,000 per annum.

Under Section 80 DDA, a deduction up to Rs. 40,000 p.a is allowed from gross total income, when a contribution or deposit is made with the LIC for the maintenance of a handicapped dependent.

Under Section 80 CCC, a deduction up to a maximum of Rs. 10,000 per annum is allowed from gross total income. Any sum received under insurance policy including maturity bonus etc., is non-taxable. The exceptions to this are Keyman Insurance.

What is surrender value?

The cash value payable by the insurance company on termination of the policy contract at the desire of Policyholder but before the expiry term is known as Surrender Value. A policy can be surrendered, provided the policy is kept in force at least three years. The bonus will be added, provided the policy was in force for at least 5 years, i.e., premiums should have been paid for 5 years and five years should have been completed from the date of commencement of the Policy (this condition is not applicable in respect to claims by death.)

How much life insurance should an individual own?

It is very difficult to place a monetary value on human life. Theoretically, therefore an individual can have life policies for any amount. However, in practice, it is determined based on the needs for insurance and the capacity to pay premiums regularly. Though there is no thumb rule to arrive at the exact amount of insurance, it is determined by taking six times of the annual income of the person, if such income is not fluctuating. If the income is fluctuating, it is desirable to work his average annual income and then determine the amount of insurance. From an individual’s standpoint, one should be able to save at least 10% of his annual income.

When does a policy acquire paid up value?

After payment of three years of premiums if subsequent premiums have not been paid under a policy, such a policy is said to have acquired a paid up value, though literally it is a lapsed policy. The paid up value is calculated by multiplying the sum assured by the ratio of number of premiums paid under the policy and the number of premiums payable under the policy. The value so arrived at, should not be less than Rs.250 excluding the accumulated bonus under such a policy. Such a reduced paid up policy will not be entitled to participate in future bonuses.

What is meant by “mortgage redemption policy”?

This life policy is designed to meet the requirements of individual borrowers to ensure that the outstanding loan is extinguished automatically in the event of the borrower’s death. The annual premiums depend on the schedule of outstanding loan amounts at the beginning of each year. On death of the borrower, the loan is liquidated straightaway by admittance of claim under the policy. Benefits are fixed and death benefit decreases with every year. Premium under the plan can also be paid in a lump sum as single premium.

What is the benefit of opting riders/add on?

Riders/add on are the additional benefits which can be added to the basic policy by paying marginal additional premium. Each company has their own set of rider and most common rider’s offers by insurers are:

» Term rider.

» Critical illness rider.

» Accidental death and dismemberment rider.

» Waiver of premium rider.


What is permanent total disablement?

Permanent total disablement means that the life assured is incapacitated to work or follow an occupation and obtain wages, compensation or profit. The following are considered to constitute such disability:

Irrecoverable loss of entire sight of both of the eyes

» amputation of both hands

» amputation of both feet

» amputation of one hand and one foot

Is there any maximum limit in sum assured for grant of accident benefits? Maximum accident benefit one can avail under all the policies, which he holds, is fixed and varies from company to company In case of LIC it is Rs. 5 lakh sum assured.

Can an individual have accident benefit alone?

No, the benefit is available only along with a plan of assurance wherein it is permissible.

What is meant by a ‘with profit plan’?

A policy issued under a with profit scheme is eligible to participate for bonus addition arising out of surplus revealed on conducting an actuarial valuation. Premium under a with profit plan is always greater than the rate for a without profit plan. That is while computing the structure of a premium table a bonus loading is made to the rate determined by the other three factors viz., Mortality, Interest and expenses.

At what intervals are actuarial valuations conducted?

Every year the policies that are in force are valued and the present value is arrived at. The assets are also valued as on that date and a comparison is made to ascertain the valuation surplus. 95% of the valuation surplus is distributed among with profit policyholders.

What is the system of bonus calculation?

LIC follows a system of reversionary addition to the sum assured at the rate per thousand of sum assured declared every year. Bonus vests with the policy if it is in force. Paid up policies are not eligible for bonus.

Disclaimer:

The above material is provided for general information only and do not constitute legal or other professional advice. This information is current at the date of publication but may be subject to change without notice and accordingly, may not be up to date at the time of viewing. Information specific to a product may be obtained from the concerned Insurer.

Higher EPFO rate to make bank FDs less attractive

Hike in interest rates on provident fund by one percentage point by the EPFO to 9.5 per cent will make fixed deposits schemes of the banks less attractive for the organized sector employees. While the retirement fund, popularly known as provident fund, will yield 9.5 per cent on deposits held with the Employees Provident Fund Organization (EPFO), those parking their funds with banks will get a maximum of 7.75 per cent on fixed deposits with maturity of three to ten years.


While the market leader State Bank of India pays 7.75 per cent on fixed deposits for maturity of eight to 10 years, largest private sector lender ICICI Bank gives the same interest rate on deposits ranging between 3 to 10 years. Senior citizens, however, get an additional rate of up to one per cent on their deposits held with the banks.

An economist at a leading private sector bank said, although the number of people contributing to EPFO is far lower than the bank account holders, there could be some diversion. However, high interest rate could drive more contribution towards EPFO, even as the lock-in period remains high in this provident fund, he said.

Industry chamber FICCI said the high rate of interest by EPFO "could also put pressure on the yield rates of some of the other competing saving instruments." Most of the public and private sector banks had raised the interest rates on fixed deposits in August following the tightening of the monetary policy by the Reserve Bank of India.

The central bank is likely to come out with mid-quarterly review of monetary policy tomorrow. Changes in the key policy rates may have a bearing on the interest rates on bank deposits.

The Central Board of Trustees (CBT), the highest decision making body of the EPFO, today decided in favour of raising the interest rate on provident fund by one percentage point to 9.5 per cent, the highest rate in the last five years. The interest rate on the provident fund deposit has been kept at 8.5 per cent since 2005-06.

The decision of the CBT to hike the interest rate, which is likely to be notified by the Finance Ministry, will directly benefit 4.71 crore subscribers.

The Learning Curve

Asset Allocation: The key to successful investing


Saving a portion of our monthly income is inherent to all Indians. This is one of the key reasons that India is among the top countries with the highest net household savings rates. All of us save in order to fulfill our planned long-term financial goals as well as for the unforeseen contingencies that may arise.

In India, saving at an early age is a mindset. As a child, we are taught to save in bank accounts and gradually, as we mature, the focus shifts to investing in fixed deposits, bonds, life insurance products etc. However, how does one realize how to deploy money amongst various financial assets to derive? Maximum benefits? There are various asset classes such as equity, bonds, fixed deposits, etc. that have different degree of risks & returns associated with them. Investing in equity has the potential to deliver highest return but comprises of highest risk too where as investing in debt may not give very high returns and the risk taken too, is not as high. It is important to assess these asset classes before investing in them. The process of selecting assets that will generate adequate returns to meet the financial goals at the desired level of risk is known as Asset Allocation.

The key objective of asset allocation is to increase the return on the invested amount while lowering Investment risk. An ideal portfolio should have a judicious mix of asset classes.

There is no asset allocation, which will universally benefit each & every individual. It needs to be customized to suit one’s profile. It is one of the most critical elements of successful investing and needs to be utilized consciously while investing.


5 easy steps to simplify asset allocation decision


Step 1: Determine your Investment Objective:

Decide the purpose for which you are investing. Investment objective of one person may be very different from that of another. For instance, the objective of a person nearing his retirement would be to ensure a regular pension and capital preservation, while that of a young professional would be to achieve capital appreciation to buy a house.

Step 2: Determine your Risk Appetite:

Few factors that affect risk appetite are life stage, net worth, income and past investment experience. An individual who is young has more disposable income and higher risk appetite and may opt to invest in assets with higher risks. He will follow an aggressive investment strategy. Risk appetite of someone who has suffered huge losses in the market will be very low.


Step 3: Determine the Time Horizon of your investment:

An individual will retain his investment for the period. This affects the level of risk that one can undertake. If the investment period is longer, the risk is equally low. The investment period broadly depends upon two parameters, namely, the objective of the investment and the financial resources available at an individual’s disposal. E.g. if the investment objective is to accumulate for your 10 year old child’s wedding, then one can invest in assets with higher risk to generate higher returns. Individuals nearing the age of retirement will take less risk as their period for investing is much shorter. Furthermore, someone who has a reserve sum to take care of any unforeseen event will have a longer investment period as compared to someone who relies on his current income to fulfill all his needs.


Step 4: Select a Diversified Portfolio:

Based on your predetermined goal, risk tolerance and period of investment select a diversified portfolio, which includes various assets, classes namely equity, bond & money market instruments. E.g. if one’s objective is to meet near term obligations, then he may be better off by investing in money market instruments.
An aggressive investor with high-risk appetite or long-term horizon may have his portfolio skewed heavily towards equities. On the contrary, a conservative investor with low risk appetite or short-term time horizon may have his portfolio skewed towards bonds.


Step 5: Rebalancing your Asset Allocation:

One should not frequently change the asset allocation based on market conditions. It is wise to review asset allocation annually; however, rebalancing should be done only if the investment objective or risk appetite undergoes a change.

Always remember that for reaping true benefit out of any financial investment, it is essential to understand one’s investment objective, risk appetite and investment horizon. It is also important to follow a disciplined approach towards investments and avoid timing the market.

It must be noted that life insurance should be considered as a unique asset class in itself, since it creates an asset in case of an eventuality like death while also providing a lump sum amount to meet future goals. ULIPs are well crafted to address the varying asset allocation needs of individuals. They offer a basket of funds with different asset compositions to suit individual’s profile. While choosing a fund option, it is essential to assess one’s asset allocation requirements and accordingly make investments to optimize returns while assuming comfortable levels of risk. Further, the flexibility to switch fund options should be resorted to in the light of changing individual’s needs and not as a tool to speculate market movements.