The Indian insurance market space has seen the rise of ULIP plans in recent times. Providing you with a financial security cover against life risk, it also offers sound investment options. Here you have the opportunity to invest in a diverse range of qualified funds that enables investment in the likes of mutual funds, stocks, or bonds.
Best ULIP plans have a single integrated plan wherein the protection and investment components can be managed. Depending upon specific choices, returns and your needs. Nevertheless, it is essential to note that investments in even the best ULIP plans are subject to market risks. Thus, as a potential buyer, you are advised to make your investment choices post evaluating the details of any ULIP plans’ you might invest in.
With the advent of the internet and comparison websites, getting the best ULIP plan is not as challenging as before. Most insurance websites are largely instrumental in helping first-time investors as well as seasoned buyers in making the right decision. However, it is smart to compare ULIP plans online to check the different features, terms and conditions.
How Does a ULIP Plan Work?
Your primary aim of choosing a successful investment product would probably be to
get a desired level of returns. Most ULIP plans offer a range of benefits and are
among the best investment options if chosen correctly. So, what is ULIP?
Generally, ULIP plans work like a standard insurance policy where you will need to
pay the premiums as per the schedule. Then, a part of the premium will be invested
towards the insurance component and the rest in markets to generate good returns.
The best ULIP plans provide you with the freedom to choose the coverage amount
so that your family will be protected in your absence.
Additionally, ULIP plans offer a chance to earn from the economic progress of market-related investments instead of parking their funds in a regular insurance plan.
How to Choose the Best ULIP Plan for Self?
Two main factors need consideration when looking for the best ULIP plan:
- Risk Capacity
The most crucial component of life and investment planning is to be extremely careful and aware of your risk-taking capacity. You should follow the thumb rule of taking on significant risks in the earlier stage of life as this scope might decreases when you have dependents. Other factors, such as an illness, may also be considered as they may curtail your risk-taking capabilities in the present or future.
Thus, being aware of your risk-taking capability and stage of life will help make a better decision about which kind of ULIP funds to go for. If you can take high-risks, equity funds will serve as a better option. You will find many reliable insurers offering a range of such funds to keep up with your risk appetite.
Moreover, you will find that those funds have a backing of strong fund performance and are on track to help you meet your life goals. It will help check if the chosen insurer will allow free fund switching and let you cope with the market unpredictability. If so, then you may switch from one fund to another as per the prevailing market conditions.
- Personal Investment Goals
To successfully meet the desired life goals and be financially equipped for the same, you must make clever investment decisions. Your life goal can be anything from purchasing a new home for your loved ones to funding your children’s education, and all of it needs planning. So, it is vital to first identify the life goal before selecting all appropriate investment.
It would also help if you calculated the time required for the same. For instance, if you want to purchase a dream car in the next 5 years, then it becomes easy to decide the amount of investment needed. Plus, you can strategize your investments in a specific manner to successfully achieve your goal.
To ensure that you have the best ULIP plan, you should also consider some critical things in mind before choosing any plan:
- Choosing the Right Amount of Life Cover
As already discussed above, ULIP plans help you meet your financial goals. Additionally, they also come with the feature of providing a life insurance cover to secure the dreams of your dependents. Thus, the plan will give out a lump-sum amount to the nominee mentioned in the policy in case of an unforeseen event.
Generally, ULIP plans allow a minimum life cover of 10 times the plan’s annual premium as regulated by IRDAI. However, life cover multiple is a flexible amount. You can select the life cover multiple as per your need and subject to a particular plan limit.
- Key Features of ULIP Plans
To find the best ULIP plan, you must ensure that it has these key features:
- Redirection of Premium: With this option, you can invest your future premiums in a different fund of your choice other than your base fund.
- Partial Withdrawals: This option allows you to withdraw a part of your money depending upon your requirement.
- Top-Ups: ULIP plans with this option allow you to invest your surplus money either once or multiple times in your existing plan.
From not knowing what is ULIP to understanding it in detail, we hope that the article has helped you in every possible manner. You can read more about the policies online to buy the best ULIP plan.