Want to get your life covered as well as invest for your long-term financial goals? If yes, then ULIP (Unit Linked Insurance Plan) is just for you. A ULIP insurance plan is one such investment instrument which suits investors who do not have the inclination to keep investment and insurance separate but want to save for their long-term goals.
The premium amount you pay towards the ULIP policy is put into different asset classes or fund options. Most Ulips offer several fund options across equity and debt asset classes and provide strategies to make optimum use of them. It refers to a fixed portfolio strategy. After that, you, as the policyholder, may choose to change the allocation pro-actively online or offline by making a switch.
While investing in a Ulip insurance plan, you must be aware of some tips that will help you maximise your gains. Let us take a look:
- Invest for Long Term
A ULIP, when compared to other insurance products, almost always outperform them as it provides the dual benefit of insurance and investment. Unlike other insurance policies, a ULIP invests the investment part of the premium you paid in different funds, diversifying risk and hence, maximising gains.
It is better to invest in a ULIP on a long-term basis as they allow you to switch between investment options. You can choose to switch the investment based on your appetite for risk and the state and direction of the market. ULIPs also provide investors with a substantial tax benefit of 1.5 lakh rupees. A long-term investment will add up to be a considerable amount. So, in the long term, not only does the insurance and investment component help generate wealth, but the tax saving component also helps retain wealth.
- Switch Funds
Your financial goals play an essential role in defining your risk appetite and further creating a financial portfolio. Optimising your asset allocation strategy in the right way can determine the risk to return ratio on your portfolio. Asset allocation refers to diversifying your investments across different asset classes simply.
Hence, the right optimisation of your asset allocations, by investing in different asset classes, can save you from massive losses that you may suffer by merely investing in a single asset class. With a ULIP insurance plan in your investments, you can easily switch between different asset classes like debt, cash, and equity, depending on the financial goals and risk appetite.
- Invest as per Market Conditions
As a safety net, the beneficiary of the ULIP policy receives either the sum assured or the fund value, whichever is higher now of claim in case of your demise. The fund value is paid to you in the event where you survive through the maturity of the policy. Therefore, it is advisable to stay updated with the market,which ensures that your beneficiary receives a higher fund value benefit from your monitoring of the funds in the event of your demise.
- Buy from a Renowned Insurer
The choice of insurer matters a lot when you plan to buy a ULIP plan. While purchasing a ULIP insurance plan, it is crucial to explore the options available online. With the advancement in technology and the insurance sector, you can now easily get insurance quotes online and choose the best policy. More importantly, make sure to check the chosen insurer’s history and reputation for maximum coverage, protection and returns. You can check the reviews available online and decide whether to opt for a particular insurance provider or not.
Get the Most of your ULIP Plan
ULIPs can be the most cost-effective way to enter the equity market and make sizeable returns over the long term. They are life insurance plans with the added benefit of investing in the capital market for wealth creation. You can choose from the variety of policies offered by insurance companies to invest a percentage of your premium in well-established investment funds. All you need to do is make the most out of the ULIP Insurance Plan for higher returns and follow simple tips for higher returns.
ULIP plans offer a safe and secure investment option with healthy market returns. You also get the flexibility to make changes to funds and secure your money from market fluctuations. Whether you want to acquire wealth for child education or retirement, a ULIP plan can help you fulfil all your life goals. You can also consider other investment routes such as NPS (National Pension Scheme) to gain substantial NPS returns over time and child insurance plans for specific goals. Whichever investment plan you choose, remember to invest wisely for maximal benefits.