Definition
Policy Administration Charge
Policy administration charge is a recurring fee deducted from a ULIP to cover the insurer's ongoing record-keeping and servicing costs.
Usually levied monthly by cancelling units, the administration charge may be a flat rupee amount or a percentage of premium, and it can escalate at a capped rate each year. It is separate from the fund management charge and the mortality charge.
Like all ULIP charges, the administration charge is subject to IRDAI's overall cap on the reduction in yield. Because these deductions compound over time, even modest administration fees can meaningfully erode long-term returns, so comparing total charges across ULIPs matters more than any single fee.
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.
- Unit Linked Insurance PlanA Unit Linked Insurance Plan (ULIP) is a life insurance product that combines life cover with investment in market-linked funds chosen by the policyholder.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.