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How to Get the Best from a ULIP?

Life insurance plans are often purchased for the sake of life cover which, in any uncertainty, will provide enough amount to the loved ones. But is it limited only up to the death benefits? The answer is No! Since the past few decades, the life insurance companies have been introducing several options to the policyholders, and investment provision is also one of the prominent features. To name one of the popular plans, ULIPs stand to be entirely suitable options for them who expect a sizeable corpus from the investment. But, most of the people don’t know the essentials for getting the best from a ULIP. Here are a few tips.

Select Appropriate Life Cover

Though ULIPs are opted majorly aiming the investment returns, one should never forget that its primary goal is to provide life cover to the life insured. The corpus may or may not be achieved, but there are some guaranteed payouts which is nothing but the sum assured decided at the inception of the policy. In case if the market doesn’t perform well, the sum assured offered as the death or maturity benefit will be helpful for any reason. Choosing the appropriate life cover is the initial step of getting the best from ULIPs.

Select the Funds Carefully

In the traditional investment plans such as endowment plans, you never have an option to choose between the funds to invest. On the other hand, a ULIP is a plan that gives you several options of the funds such as equities, debts, or a mix of both etc. to invest your hard-earned money. Since you have the opportunity to choose your funds and have control over it, you should always determine your risk appetite and go for the right one. Usually, debts are considered as the low-risk funds that provide lower returns as compared to equities. If you are high risk-taker, you can go for equities anytime. If you have a moderate risk hunger, a blend of both debts and equities can be chosen in a particular ratio.

Stay Invested for a Long Time

If you are seeking wealth creation from your investment plan, a ULIP is always a perfect option. When you set your financial goal, you should always be aware that the goal has to be of long-term. You may get some returns in the short term but will not be meeting your expectations. Therefore, always stay invested for long-term and get anticipated returns. Also, the insurance company may declare loyalty bonuses for staying invested for the long-term.

Besides the three points given above, ULIPs also provide you with the flexibility of switching between the funds. Thus, if you don’t see any positive outcomes from the funds examining the market trends, you can switch to a different one as per your convenience. Keep these necessary things in mind and get the best from a ULIP.

Post Author: Fathiyya Al Shaikh

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