Most financial advocates today suggest the use of Unit Linked Insurance Policy (ULIP) as an important opportunity to build up the investment portfolio. The ULIP insurance is a product which gives you the opportunity to invest as well as have an insurance cover under one plan. ULIPs offer immense protection, stability and security to a policyholder during his life and after his death. What more does a person need in terms of an insurance policy?
Selecting the right ULIP
It is important to understand the parameters involved whilst selecting the most appropriate ULIP, based on the ability to cope with risk. Selecting the right ULIP insurance policy may vary as per the capacity to handle risk and may also depend on personal investment goals.
Efforts should be made to choose an online ULIP plan as various plans could be compared with each other to select the one which is most appropriate as per one’s financial needs. Also, a ULIP plan which has the widest range of options across allocation of assets, should be selected. ULIPs could have different personal investment goals and therefore, should be opted for accordingly. These vary from funding a child’s education to planning for retirement or meeting medical emergencies. In all these phases, funds are required urgently by an individual and therefore he/she can opt for withdrawals whenever needed to meet the emergency. One should always consider ULIPs as a long-term investment having minimal risks and therefore, pay off well.
What to watch for
However, the charges and taxes associated with ULIP policies cannot be ignored. Therefore, the plan that gives the greatest flexibility in terms of the best ROI and least associated charges and risk should be picked up by the investor. Furthermore, one should always select the ULIP plan which gives the facility of switching between funds, whichever option seems most beneficial. Also, the ULIP which gives the facility of redirecting your premium should be selected. The premium should not create an element of pressure or burden on you. One should be aware that the policy might lapse anytime if the premium is not paid on time. Therefore, many factors and parameters need to be considered whilst selecting the best ULIP insurance-policy.
To sum up
To conclude, it is important to know what a ULIP policy is and have further insight into its structure and benefits. The insurance cover, risk tolerance, premium payment details, incurred charges and switching option between funds should be studied well by the investor. These benefits might range from fund switch, premium redirection, partial withdrawals to multiple top-ups in existing policies. Thereafter, it is important to select the most appropriate plan from those available to suit one’s requirements and personal goals. It is also important to take the right amount of life cover and look for a long-term investment opportunity. The key features, charges and tax benefits associated with ULIP plans should be discussed well with the advocate. Therefore, based on risk appetite and future targets, the right balance between equity and debt policies could be selected. The ULIP policies that depict high flexibility in terms of premium payments should be selected.
The aforesaid article presents the view or an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ before making any decision..
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