United Linked Insurance Plan (ULIP) is considered one of the best life insurance plans for the dual benefits of life cover and market-linked investment options. However, considering the slightly complicated nature of the ULIP workings, there are many misconceptions regarding ULIPs among investors.
Here are 6 Myths you should know before investing in ULIP policy.
- Myth 1 - ULIP investment is highly risky
Fact: While investing in a ULIP plan, you get a choice of funds with varying risk levels. You can choose the fund based on your risk appetite and switch between the funds if required during the policy term.
- Myth 2 - ULIP Policy is costly
Fact: ULIP charges, such as policy administration and fund management, make it slightly costlier than other life insurance plans. However, the ULIP benefits are worth the cost incurred. Additionally, ULIP tax benefits on the premium paid can be availed of as per prevailing tax norms.
- Myth 3 - ULIP does not provide liquidity options
Fact: ULIP insurance plan has a lock-in period of five years. Partial withdrawal is possible after this period. This is a distinct feature that allows for profitable long-term investment. There is no exit or surrender charges for full withdrawal before the policy matures.
- Myth 4 - Life cover changes based on market volatility
Fact: Life cover and market volatility are not linked. Any changes in the price of the funds allocated will not affect the pre-decided life cover sum insured in any way.
- Myth 5 - ULIP does not provide good returns
Fact: The Edelweiss Tokio ULIP plans provide funds with a good and beneficial combination of equity, debt and hybrid funds. You can also calculate the returns using a ULIP calculator. When you make the choices and switches between the funds at the right time, you can make good returns.
- Myth 6 - ULIP does not provide riders for insurance
Fact: ULIP provides additional coverage with riders such as accidental death benefit, waiver of future premiums, total and permanent disability rider, etc.
ULIP returns are competitive because they provide two important benefits. The life cover and investments will serve as financial protection to your family forever.