Returns in a ULIP scheme are generated through the performance of the funds in which your premium is invested. The fuller explanation is more useful, because a ULIP has a specific internal working: premium allocation, units, fund value, NAV, charges, switching, and compounding over time. In a ULIP fund, NAV reflects the value of the fund’s assets after relevant expenses and liabilities, divided by the number of units. The returns generated in the policy depend significantly on the type of fund selected and the time you remain invested. A ULIP may include fund management charges, mortality charges, policy administration charges, premium allocation charges, and other charges as mentioned in the policy terms.