What are the charges in a ULIP?

A. Policy Allocation Charge

B. Mortality charge

C. Both A & B

D. None of the above

Answer: Option C

Solution(By Examveda Team)

The premium of ULIP is divided into three parts:
1. Firstly, there is a policy allocation charge (PAC) which is comprised of agents' commission, policy setup costs, administrative costs and statutory levies.
2. The second component is the mortality charge which is the cost of providing risk cover.3 The balance of premiums after meeting the above two are allocated for the purchase of units.