You can always ensure that you have the best saving and investing options in hand when you look around. You can explore ULIP policies and you never know what turns out to be the perfect pick for you. After all, it is about what you are looking for to secure your future.
You can figure out the best ulip plans when you search around. Well, these ulips are a blend of investment and insurance. Hence, the premium that the investor, in this case, you, pays towards the ULIP gets divided, and a portion of it goes towards the investor’s insurance coverage and that of the remaining for investments. But then, you need to be sure that you know about all the things before you go for ULIP. The following are a few of the things you should be aware of before going for ulips.
What You Know about ULIP?
You might have heard about Unit Linked Insurance Plans (ulips). But then before you buy a ULIP, you require to find out whether you actually require it. The chief purpose of life insurance is to guard people and their dependents in a financial sense. Therefore, foremost, you need to see in case you have dependent. For instance, your spouse, parents, and children. Hence, if no one is reliant on you, you don’t require to get a life insurance cover.
Amidst the different kinds of insurance plans available, term insurance plans are kind of pure protection insurance plans, whereas if you speak of ulips, these come with two components — investment and that of insurance. The unit-linked insurance plans or policies are a blend of investment and insurance. Hence, the premium that the investor pays towards the ULIP gets forked, and a part of it goes towards his/her insurance coverage and the remaining for that of investments. However, it is important to know that the value of ulips is grounded on market conditions.
Once you have established your financial goal and the type of ULIP needed to achieve it, next compare the ULIP offerings in the market. Compare the premium payments, ULIP performance, background expenses, etc. Additionally, to ascertain the returns from investments in the particular ULIP, investigate the nature of funds that the ULIP invests in.
Remember that these ulips might charge you up to 1.35 percent as the fund management part in the form of expense ratio in the portfolio of equity. However, in case it is not equity, you could be charged less. Note that the investment part might range from one hundred percent equity to that of one hundred percent debt or any other percentage in between. There have been professionals and experts suggest that investors must invest based on their risk appetite. Investors also get the option to move from equity to debt inside the same ULIP product.
Don’t forget that you do consider the risk or danger factor of ulips. Once you compare it to schemes like ELSS, the risk or danger in ULIP is usually a bit high, as ULIP investment is not as spread as compared to ELSS. Ulipsalso comes with a lock-in duration of five years. Then in case, a ULIP policy is surrendered in the first 3 years, the insurance cover stops to exist immediately. Apart from this, the surrender value might be paid only after three years.
Are There Any Benefits of ULIP Investment?
There are many benefits and a few of these are like:
How to Find the Right ULIP Policy?
Then there are so many options in the industry of investment and insurance. It gets challenging for an investor who has less or no knowledge about these. They can get trapped in any wrong or less profitable option. The point is once you are well-informed and you explore all the options in a patient manner; you can make the right move. The following are a few quick things you must ensure before you pick any plan or policy.
So, ulip investment is a good choice for you to secure the future but make sure that you are doing it the right way. Keep all the things in mind that are discussed in this post.
Image Credits: Photo by Markus Frieauff on Unsplash
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