[Solved] Which of the following best describes the role of the 'Fund Management Charge' in a ULIP? — Ans: It is a fee charged for managing the investment funds linked to the policy. | Insurance Awareness

Insurance Awareness - Life Insurance - LIC

Which of the following best describes the role of the 'Fund Management Charge' in a ULIP?

AIt is a fee charged for managing the investment funds linked to the policy.

BIt is a charge deducted to cover the insurer's life cover risk.

CIt is a penalty for early surrender of the policy.

DIt is a tax levied by the government on ULIP premiums.

Step-by-Step Solution

Step 1: Understand Fund Management Charge
This charge is levied by the insurer to cover the cost of managing the investment funds in which the ULIP units are invested.
Step 2: Analyze options
It is a fee charged for managing the investment funds linked to the policy. correctly identifies it as a fee for managing investment funds.
Final Answer:
It is a fee charged for managing the investment funds linked to the policy. → Option A
Quick Check:
Mortality charge covers life risk; surrender charge is penalty; tax is separate.

Quick Trick: Fund Management Charge = investment management fee.

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Which of the following best describes the role of the 'Fund Management Charge' in a ULIP?