Definition
Premium Redirection
Premium redirection changes how future ULIP premiums are allocated across funds, without altering the existing accumulated units.
Unlike a fund switch, which moves money already invested, premium redirection only affects the split of premiums yet to be paid. A policyholder might, for example, direct new premiums entirely into a debt fund while leaving existing equity units untouched.
Insurers usually allow a set number of free redirections per year. The feature lets investors gradually change their asset mix going forward, complementing switches for managing the overall ULIP portfolio over a market cycle or as retirement nears.
Related terms
- Asset AllocationAsset allocation is the decision of how to divide your portfolio among major asset classes — such as equity, debt, gold and cash — based on your goals, horizon and risk tolerance.
- Fund SwitchA fund switch is the movement of a ULIP's accumulated units from one investment fund to another, such as from equity to debt.
- 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.