Published Jun 18, 2026 3 mins read

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In summary

Mortality charges in ULIP plans are deducted for the life insurance protection offered under the policy. The amount usually depends on your age, life cover amount, and fund value during the policy term.

  • Mortality charges are one of the standard ULIP charges deducted from your fund value. 
  • Younger policyholders generally pay lower mortality charges than older buyers. 
  • The ULIP mortality charge formula usually considers the sum at risk and the applicable mortality rate. 
  • These charges are deducted by cancelling units from your ULIP fund. 
  • Higher mortality charges can slightly reduce long-term investment returns over time. 
  • Understanding ULIP charges 2026 can help you compare plans more effectively before investing. 

You can compare ULIP plans carefully through Bajaj Finance Insurance Mall and understand the complete charge structure before choosing a policy.

Introduction

ULIPs combine life insurance cover with market-linked investments. Along with investment-related costs, insurers also deduct mortality charges for the life cover provided under the plan. Many people focus only on returns and ignore these deductions.

Understanding mortality charges in ULIP plans can help you estimate the actual impact on your investment value over time. Once you know how these charges work, it becomes easier to compare ULIP plans and choose suitable coverage for your financial goals.

What are ‘mortality charges’ in ULIP?

Mortality charges in ULIP plans are the amount charged by the insurer for providing life insurance protection. This charge covers the financial risk taken by the insurer in case of the policyholder’s death during the policy term.

The charge usually depends on factors such as your age, sum assured, gender, health condition, and the remaining fund value. In most ULIPs, mortality charges are deducted regularly by cancelling units from your investment fund.

As you grow older, the mortality risk increases. Because of this, mortality charges in ULIP plans generally increase with age. Understanding these deductions helps you estimate how much of your premium stays invested for wealth creation.

Basically, ULIP = Insurance + investment for long-term growth. So, you can secure your wealth and get life cover in one plan. Check plans and get quote!

How is mortality charge calculated in ULIP plans?

The ULIP mortality charge formula mainly depends on the “sum at risk” and the applicable mortality rate. Understanding this formula helps you estimate how much gets deducted from your ULIP fund over time.

  • Basic mortality charge formula: 

In most ULIPs, the mortality charge is calculated using this structure: Mortality Charge = (Sum at Risk × Mortality Rate) ÷ 1,000 

(The ‘1,000’ in the ULIP mortality charge formula represents the unit used by insurers to calculate insurance risk charges. Mortality rates are quoted per Rs. 1,000 of sum at risk. So, the insurer divides the total risk amount into Rs. 1,000 blocks and applies the mortality rate to each block.)

  • What is ‘sum at risk’?

The sum at risk is usually the difference between the life cover amount and the current fund value. If your fund value increases significantly, the sum at risk may reduce. 

  • Mortality rate factor:

Insurers decide mortality rates based on age, gender, health profile, and underwriting guidelines. Younger policyholders generally have lower mortality rates compared to older individuals. 

  • Charge changes over time:

Since the fund value changes regularly and your age increases every year, mortality charges may also change during the policy term. 

  • Effect on investment value:

Higher mortality charges can reduce the amount that remains invested in market-linked funds. This may slightly affect long-term ULIP returns. 

How are mortality charges deducted from your ULIP fund?

Mortality charges are usually deducted directly from your ULIP investment value instead of being collected separately. This deduction happens through cancellation of fund units from your ULIP account.

  • Units are cancelled from your fund: Insurers deduct mortality charges by redeeming a certain number of units from your ULIP fund. The deduction reduces your overall fund value. 
  • Deduction happens periodically: The insurer generally deducts mortality charges at regular intervals during the policy term. The exact frequency depends on the policy structure. 
  • NAV affects unit deduction: The number of units cancelled depends on the Net Asset Value (NAV) of your ULIP fund at the time of deduction. A higher NAV may require fewer units for the same charge amount. 
  • Impact increases over time: Mortality charges may rise as your age increases. Over long policy durations, these deductions can gradually affect wealth accumulation. 
  • Visible in policy statements: ULIP account statements generally show the mortality charge deduction separately. This helps you understand how much is being used for life cover. 

Age-wise mortality charge rates in ULIPs (Illustrative)

Mortality charges generally increase with age because the insurance risk for the insurer rises over time. Younger investors usually pay lower charges compared to older policyholders.

Here’s what that means in practical terms:

Age groupWhy charges differWhat happens in your ULIP
20–30 yearsYounger people are generally considered lower insurance riskSmaller mortality deductions mean more money remains invested in the fund
31–40 yearsInsurance risk starts increasing graduallyCharges rise moderately, but a large part of the premium still stays invested
41–50 yearsHigher probability of health-related riskMore units may get cancelled regularly to cover mortality charges
Above 50 yearsInsurers consider the life cover risk much higherA bigger portion of the ULIP value may go towards insurance costs instead of investments

For example, imagine two people buy the same ULIP plan with the same life cover:

  • A 25-year-old may pay a much lower mortality charge because the insurer considers the insurance risk lower. 
  • A 55-year-old may pay a higher mortality charge because the insurer expects a higher mortality risk at older ages. 

This affects the investment portion of the ULIP because mortality charges are deducted by cancelling fund units. Hence, understanding these factors can help you estimate the long-term impact of mortality charges more clearly.

  • Younger entry age helps: Buying a ULIP earlier may help you keep mortality charges lower for a longer period. 
  • Higher age increases insurance risk: Insurers consider higher age as a higher mortality risk. Because of this, mortality rates usually rise gradually. 
  • Gender may influence rates: In some cases, insurers may offer slightly different mortality rates based on actuarial assumptions and underwriting criteria. 
  • Health condition matters: Smokers or individuals with medical conditions may face higher mortality-related costs depending on underwriting. 
  • Different insurers may vary: ULIP mortality charge structures are not identical across all insurers. Always review the policy benefit illustration carefully before investing. 

How does mortality charge impact on ULIP returns: Give an example

A simple mortality charge ULIP example can help you understand how these deductions affect your investment value over time. Even small deductions can create a noticeable impact in long-term investing.

  • Example scenario: Suppose you buy a ULIP with a life cover of Rs. 10 lakh and your current fund value is Rs. 2 lakh. 
  • Understanding sum at risk: In this case, the sum at risk may be calculated as Rs. 8 lakh, depending on the policy structure. 
  • Applying the formula: If the mortality rate is assumed at Rs. 1.5 per Rs. 1,000 sum at risk, the mortality charge becomes: (8,00,000 × 1.5) ÷ 1,000 = Rs. 1,200 
  • How deduction affects investment: This amount gets deducted by cancelling ULIP fund units. The remaining balance continues to stay invested in market-linked funds. 
  • Long-term impact: Over several years, rising mortality charges and regular deductions may slightly reduce the final maturity value compared to a scenario with lower insurance costs. 

How can you reduce the impact of mortality charges on your ULIP?

You may not be able to avoid mortality charges completely in a ULIP, but you can take certain steps to reduce their long-term impact on your investment returns.

  • Start investing early: Younger policyholders generally pay lower mortality charges. Buying a ULIP earlier may help reduce deductions over the policy term. 
  • Choose suitable life cover: Extremely high life cover may increase the sum at risk and mortality deductions. Select coverage based on your financial needs. 
  • Review the benefit illustration: Before investing, check the complete ULIP charges structure carefully, including mortality charges, fund management charges, and policy administration costs. 
  • Maintain long investment duration: Staying invested longer may help your investment growth offset the impact of charges over time. 
  • Compare ULIP plans carefully: Different insurers may have different mortality charge structures. Compare ULIP plans offered by leading insurers in India through Bajaj Finance Insurance Mall. In just a few steps, get quote for a suitable insurance plan.

Conclusion

Mortality charges in ULIP plans are an important part of the insurance cost structure. These charges pay for the life cover component and are deducted from your investment value through unit cancellation.

Before investing, it is important to understand the ULIP mortality charge formula, deduction method, and long-term impact on returns. Comparing ULIP charges 2026 across plans can help you make a more informed investment decision based on your financial goals and insurance needs.

Frequently asked questions

How is mortality charge calculated in a ULIP?

Mortality charges in a ULIP are generally calculated using the sum at risk and the insurer’s applicable mortality rate. The common ULIP mortality charge formula is: (Sum at risk × mortality rate) ÷ 1,000. The charge depends on factors like your age, life cover amount, gender, health condition, and current fund value.

Are ULIP mortality charges refundable on maturity?

In most ULIP plans, mortality charges are not refundable because they are deducted as the cost of life insurance protection during the policy term. These charges are used for providing life cover throughout the policy duration. However, some insurers may offer special product features linked to mortality benefits. 

Why do ULIP mortality charges increase with age?

ULIP mortality charges usually increase with age because the insurance risk rises as you grow older. Insurers use actuarial calculations to estimate mortality risk for different age groups. Younger policyholders generally pay lower charges compared to older individuals. This is why buying a ULIP earlier may help reduce long-term insurance deductions. 

Are mortality charges the same across all ULIP plans?

No, mortality charges are not the same across all ULIP plans. Different insurers may use different mortality tables, underwriting rules, and pricing structures. The charge may also vary depending on the life cover amount, age, policy type, and health profile.

Do female policyholders pay lower ULIP mortality charges?

In some cases, female policyholders may have slightly lower mortality charges compared to male policyholders because insurers use different actuarial assumptions for risk calculation. However, the actual charge depends on multiple factors such as age, lifestyle, health condition, and policy design. The insurer’s underwriting guidelines ultimately decide the applicable mortality rate for your ULIP plan.

Are ULIP mortality charges taxable?

ULIP mortality charges themselves are generally part of the policy cost structure and not treated separately for taxation purposes. Tax treatment of ULIPs depends on prevailing tax laws and policy conditions. Premiums may qualify for deductions up to Rs. 1.5 lakh/year under Section 80C /Section 123 (new Income Tax Act 2025), while eligible proceeds may qualify under Section 10(10D).

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