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June 14, 2026
The Dispatch

Definition

Fund Management Charge (FMC)

The fund management charge is an annual percentage fee deducted from a ULIP's fund value for managing the underlying investment funds.

FMC is charged as a percentage of the fund's assets and is reflected in the unit price (NAV), so it is not separately visible to the policyholder day to day. IRDAI caps the FMC for ULIP funds (notably for equity and other funds), which keeps it competitive with mutual fund expense ratios.

Because it is levied on the entire fund value every year, the FMC is the charge that matters most over long horizons. Different fund options within the same ULIP (equity, debt, balanced, money-market) may carry different FMC rates within the regulatory ceiling.

Related terms

  • Premium Allocation ChargePremium allocation charge is a percentage of a ULIP premium deducted upfront before the balance is invested in the chosen funds.
  • Policy Administration ChargePolicy administration charge is a recurring fee deducted from a ULIP to cover the insurer's ongoing record-keeping and servicing costs.

Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.