Imagine you have a box of gold coins. Every year on your birthday, you gift yourself one gold coin that you keep adding to this box. At any given point, the total value of this box will vary depending upon the market value of gold at that time.
Fund Value of your ULIP plan works in a similar way. In exchange of the premium that you pay for your policy every year, you are invested in a combination of funds or a single fund of your choice (as per the product features). Thus, the market value of these funds at a given time is called Fund Value. It depends on performance and conditions of its individual components like equity, debt, a combination of both or others, etc. You receive the maturity amount based on the fund value of your funds on the date of maturity or selected frequency in case of settlement option.