Unit-Linked Insurance Plans or ULIPs are a good option for those who want to grow their money and get themselves insured at the same time. With more consumer friendly ULIPs in the offing, it’s certainly something you might want to consider in greater detail.
The beauty of the ULIP Plan is that it offers everything in one product and has quite a few benefits over other forms of investments.
In unit linked products, it is important to remember that you can choose the pattern of investment through the funds available – some of which are equity oriented, some are debt oriented while others present a balanced set of assets to invest in. You also get a host of investment strategies where experienced fund managers decide your asset allocation, in case you are not confident of deciding your asset allocation yourself.
ULIPs are also quite an efficient tool for tax planning, since the investment itself, any switches that you make between funds and/or strategies during the policy term, and the policy proceeds at the end are all tax exempt.
Moreover, the transparent charge structure and potential for growth afforded by ULIPs make them ideal as a part of comprehensive financial plan.
ULIPs and sum assured
Simply speaking, the sum assured is the amount promised by the insurer to the nominees of the policy holder in case of any unfortunate event. The sum assured is generally dependant on the actual premiums paid and also on the sum assured multiples if any.
Difference between ULIP and term insurance policyThere is a difference between term insurance plans and ULIPs. In a term insurance policy, the nominee/s receive a fixed amount as the sum assured in case of the policyholder’s death. In ULIP’s case, the final amount can comprise the sum assured, the fund value or both.
To sum up
ULIP plans are no longer the black sheep of the investment portfolio. The new age plans are much more flexible and transparent when it comes to charges. What’s even more interesting is that many such plans have zero charges and some offer loyalty bonuses as well. The thing to remember is that ULIPs are best suited for those who want to protect their goals and those who can stick it out in the long run. Most importantly, invest in a ULIP for at least 15 years for the returns to be profitable.
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