Fri. Mar 29th, 2024

Unit-Linked Insurance Plans (ULIPs) have become a popular choice among investors because of its dual benefits, which include life cover and investment options. A ULIP insurance provider utilizes your premium to offer financial aid to your nominees and also help you grow your money over time. You can invest in debt, equity, or hybrid funds. Even though the returns rely mainly on the market situation, long-term investments generally offer respectable wealth build-up.

ULIPs have many features that make it an excellent insurance policy for everyone. Here are its four primary advantages: 

  1. Life cover

One of the main ULIP benefits is life cover. ULIPs are life insurance policies. The purpose of a life policy is to provide monetary coverage to the policyholder’s nominees in case of his or her absence. Hence, you need a life insurance policy if you are worried about your loved ones’ financial future. 

You have the freedom to choose the sum assured as per your needs. Just remember that the premium value depends on that. A basic ULIP can offer a sum assured of up to 10 times the yearly premium. Some policies can provide a sum assured of 40 times the annual premium. 

  1. Flexibility of choosing investment funds

ULIP insurance offers you the convenience to select the fund where you want your money invested. The three available choices are debt fund, equity fund, and hybrid fund that allows you to divide your investment between the first two alternatives. A debt fund puts the money in bonds and government securities, while an equity fund invests in company stocks. 

Additionally, a ULIP offers a fund switching feature. It allows you to switch between equity and debt funds. You can keep an eye on the financial market to recognize the type of funds that may guarantee higher returns. You can then change your ULIP fund accordingly to maximize profit. When you keep the money invested for an extended period, the switching benefit will ensure more control over your portfolio.

  1. Liquidity 

One of the most significant ULIP benefits is its liquidity. Insurers offer you the opportunity to withdraw a portion of the fund. ULIPs come with a five-year lock-in period, which means you can only opt for a partial withdrawal after that. Most insurers offer this facility for free, which is benefitting in times of emergencies. Be it a sudden hospitalization or an overdue family vacation, you can fund any immediate need from the partial withdrawal.

Keep in mind that too many withdrawals may lead to a reduced sum assured or even policy termination. Moreover, some insurers have a withdrawal limit. You can ask your insurer about these points while investing in the policy.

  1. Meeting financial goals with long-term investment

ULIP is a great investment tool to support your future financial goals. It is a long-term investment option, offering significant wealth creation. If you wish to start a new business, buy a new house, provide your children with higher education, retire early, or fulfill any other important financial commitment, a ULIP will help achieve any of these goals. One of the noteworthy ULIP benefits is the policy’s ability to create a fortune if you can remain invested for a long tenure.

Once you invest in a ULIP, the next step is to wait for the money to grow patiently. During this time, you can switch between different funds, depending on their performance. By the time your ULIP matures, it will accumulate enough returns on investment to support any significant financial goal.

You need to compare ULIP charges among different plans before making a decision. Analyzing ULIPs more closely will help you determine the most suitable plan.

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