ULIP stands for unit linked insurance plans. ULIP is a combination of insurance and investment. From a ULIP, the goal is to provide wealth creation along with life cover where the insurance company puts a portion of your investment towards life insurance and rest into a fund that is based on equity or debt or both and matches with your long-term goals. These goals could be retirement planning, children’s education or another important event you may wish to save for. Here policyholder can pay a premium monthly or annually. A small amount of the premium goes to secure life insurance and rest of the money is invested just like a mutual fund does. Policyholder goes on investing through the term of the policy – 5,10 or 15 years and accumulates the units. ULIP offers investors options that invest in equity and debt.
Unit Linked plans provide life cover additionally to high returns with a sum assured just in case of loss of lifetime of the policyholder.
The longer you invest in ULIPs the higher the return you'll expect, hence funding you on long terms. it's greater rewards than other insurances.
The ULIPs provide options of partial withdrawal when and the way ever needed.
The ULIPs are invested over a good range of funds, which may be altered as per the appetite of risk and return of the policy holder.
First and foremost, with ULIPs you get a life cover coupled with investment. It offers security that a investors family can fall back on in case of emergencies like the untimely death of the investor etc.
Finance Long Term Goals
If you have long-term goals like buying a house, a new car, marriage, etc., then ULIP is a good investment option because the money gets compounded. As a result, the net returns are generally more.) This stands true even if you want to exit after the 5 year lock-in period in comparison to not having invested the amount at all and retaining it in a savings account or in the form of an FD.
The flexibility of a portfolio switch
As already mentioned, ULIPS are usually designed in a way that they allow you to switch your portfolio between debt and equity based on your risk appetite as well as your knowledge of how the market is performing. Insurance companies, on the other hand, allow a very few numbers of switches free of cost.
ULIPs come with very low alocation charges. As per IRDA the annual charges applicable to ULIP plans range between 2-2.5% pa for first 10 yrs.
Saving for Future Goals
When it comes to fulfilling future goals such as buying a new home, child’s education, retirement planning etc., savings are a must. Without long term savings plans, ... it is difficult to balance short term needs and future goals. ULIPs help you save systematically and help you plan for these future goals. Read more