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What is Top-Up Premium in ULIP?

Neviya LaishramNov 5, 2025

A Top-Up Premium in a ULIP (Unit-Linked Insurance Plan) is an additional investment you make over and above your regular premium to increase your policy’s fund value and potential returns.

Illustration with the text “What is Top-Up Premium in ULIP?” alongside a minimal graphic of a document, upward arrow, and dollar symbol, representing investment growth and additional premium payments in a ULIP plan.

Contents

Key Takeaways
How does the Top-Up Premium work?
Charges Involved in ULIP Top-Up Premiums
Things to Keep in Mind When Buying a ULIP Top-Up Premium
Summary
Frequently Asked Questions

Key Takeaways

More Money: Policyholders can add more money to their ULIPs than their standard premiums, which increases the policy's overall value.
Flexibility: You can make these extra payments at any point during the policy term, as long as the insurer allows it.
Better Returns: Investing more money in an investment corpus increases its value, leading to better returns, especially if the markets perform well over a prolonged period.
Limitations: There may be constraints on how much and how often you can add money, such as minimum and maximum quantities. It's essential to consider the fees, lock-in periods, and their impact on the fund's risk profile before adding more money through top-ups.

How does the Top-Up Premium work?

ULIP plans with top-up premium options are versatile instruments that enable policyholders to maximise their investments, depending on the amount of money they have. However, it’s important to note that each top-up premium in a ULIP comes with its own lock-in period, typically five years from the date of payment.

Charges Involved in ULIP Top-Up Premiums

ULIP top-up premiums usually include the following fees:

Cost of Premium Allocation: A one-time deduction applied to each top-up premium to cover administrative and processing costs.
Fund Management Charge (FMC): A recurring charge (usually deducted monthly) for managing your chosen investment funds.
Mortality Charge: A monthly deduction that covers the cost of life insurance. The rate depends on your age and the sum at risk. If you add atop-up premium at a later stage, the mortality charge for that portion will be calculated based on your current age at the time of the top-up.

Things to Keep in Mind When Buying a ULIP Top-Up Premium

Before picking top-up premiums in ULIP, a policyholder should think about these crucial things:

Minimum Holding Period: You must follow the ULIP's five-year lock-in period for top-up premiums. If you surrender the policy before this period ends, the amount is moved to a discontinued policy fund and released only after the lock-in period is complete.
Transparency and Cost Advantages: A ULIP helps your money grow through market-linked investments, and adding a top-up single premium can help minimise allocation fees. It is also an inexpensive approach to expand your investment.
Using Top-Ups Carefully: A top-up premium option can be beneficial if your ULIP policy has been performing well for a while. However, you should understand the associated risks and charges.

Summary

The top-up premium in a ULIP enables policyholders to add extra funds to their existing policy, thereby accelerating the growth of their investment. You can invest more without needing to purchase a new plan, and the process is straightforward to use. If your ULIP is doing well, top-ups can help you accomplish higher goals.

Frequently Asked Questions

Below are some of the frequently asked questions on Pop-Up Premium in ULIP in Life Insurance

What is a top-up premium in ULIP?

A top-up premium in a ULIP is an additional investment made over your regular premium to increase your fund value. It allows you to invest more without buying a new policy.

Can I pay more premiums on regular insurance coverage if I want to?

You cannot add extra premiums to regular life insurance plans, but ULIPs allow you to invest additional funds through top-up premiums to help your investment grow over time.

How do you maximise benefits from a top-up premium in ULIP?

Invest top-ups when market conditions are favourable and your ULIP is performing well.

What are the 5 charges of ULIP?

The main ULIP charges are the premium allocation charge, policy administration charge, fund management charge, mortality charge and surrender or discontinuance charge.