ULIP stands for Unit Link Insurance Plan. Basically, it’s made with the combination of insurance and investment. Along with providing risk coverage, it also allows policyholders to invest in the stock, bonds or mutual funds to increase the assets coulomb. So, if you are looking for a single plan which contains investment and insurance both then you should opt for the ULIP. The ROI of the plan depends on the performance of the fund opted by you. One of the significant advantages you will get in this plan over traditional plans is that protection plus wealth-creating tool.
Salient Features of ULIP
The Fund: There are three funds options available in this plan that are equity funds, debt funds and balanced funds. If an investor risk appetite is high, then he can go for equity funds, on the other hand, if his risk appetite is low and want the considerable return of investment then he can opt for debt fund. And the last, an investor who wishes a higher amount of return but risk appetite is low then choose balanced funds.
Life Cover: As it is an insurance plan, it offers you a sum assured at the end of the maturity period. In the event, if a policyholder dies, an insurance company will pay the lump sum amount along with death benefits to his/her nominee.
Charges: In this plan, the premiums you pay are subjected to certain charges that are mortality charges, administration charges, allocation charges, and fund management charges.
Partial withdrawal: It is a unique feature which generally absent in other insurance plans. A policyholder has access to withdraw money after the first five years from the date of the availing plan.
Top-Ups: This top-up feature allows UPLIP policyholders to make an additional investment to diversify the portfolio. If you want a good return on investment, then you can utilize this feature to your benefits.
Flexibility in paying premiums: If you want to pay the premiums at the end of the duration of the plan or every month, you have the flexibility to do.
Benefits of ULIP
Market Linked Return: It is one of the most significant benefits of ULIP. It allows you to invest money in the market funds such as equity, balanced and debts as per your risk appetite and get a better return of the investment.
Life protection, investment and savings: This plan offers you two benefits of life insurance and savings at a market return investment. You have an opportunity to increase your savings by investing the market funds along with that you also get the fixed-sum assured at the end of the maturity period.
Switching between funds: This plan offers you the flexibility to switch from equity funds to balance funds or balanced funds to debt funds. At times, the changes in the funds will affect the performance of the investment as well.
We hope this comprehensive guide of ULIP gives a clear picture of whether you need to opt for this policy or not. If you want insurance plus investment plan, then it is best for you.
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