Unit Linked Insurance Plan, more popularly known as ‘ULIP’ is a life insurance product that provides insurance along with investment. Investment is offered in a variety of qualified investments such as stocks and mutual funds. ULIP has an edge over traditional insurance policies as it provides the policyholder with the opportunity to invest in a number of eligible investments along with the freedom to customize the plan according to his/her needs.
The premium that you pay in a ULIP is split in two ways:
- One part goes towards insuring you
- The second part is invested in a variety of debt and equity schemes
ULIPs allow you to decide the portion of the premium that you would like to put towards insurance; the remaining portion goes towards investments. Moreover, you can change these proportions as and when your needs and requirements change. The greatest advantage of a ULIP is the fact that they are customizable; you can switch between different funds and add additional riders to your base policy.
The investments that you make are subject to market risks. It is recommended to choose your fund wisely depending on your risk appetite. It is important to assess your needs and requirements before making a decision. Acquire all possible knowledge on this subject to avoid any major losses in the future.
While a ULIP is a smart choice for every individual, it is more suited to people who wish to keep a close eye on their investments. It also gives them the flexibility to switch between funds with relative ease.
ULIPs are highly beneficial to people who wish to invest money for a relatively long period of time.
People from varying age groups can opt for a ULIP.
The new age ULIP offers you wealth accumulation through systematic monthly plans (SMP), wealth preservation with systematic transfer plans (STP), and wealth utilization through systematic withdrawal plan (SWP). It enhances your fund value through loyalty additions, guaranteed additions, and booster additions. SWP helps you in managing your retirement fund whereas STP aims at protecting you from market fluctuations.
ULIPs have a great number of benefits. You can choose a plan that suits your investment needs.