Misconceptions About ULIPs

Today, almost all of us expect some additional benefits under every insurance plan. When it comes to the life insurance plans, the concern is to get the maximum amount for the safe and a bright financial future. When ULIPs are considered, they are known to be the investment life insurance plans that give you the sizeable corpus at the end of the tenure. But again, many people have misconceptions in their mind due to product awareness and lack of information. Following are the myths people usually possess in their mind.

ULIPs Are Riskier Than Other Investments

Many people think that the money you pay towards ULIPs, are further invested in the equity market; thus, it is riskier than other investments. But, it is not true at all. A part of the premiums is kept aside for the insurance purpose, and the rest is invested in several market-linked instruments such as debts and equities. Most importantly you have a choice of selecting the funds where you want your money to be invested.

ULIPs Are Expensive as Compared to Other Policies

The life insurance products like ULIP are quite confusing, and whenever you go to the internet to dig about the plan, you probably get misguided due to confusing information. Many portals say that ULIPs incorporate a few charges, but it has to be understood that all the costs are incurred into the premiums itself. Also, the annual charges are cut down up to 3% by IRDAI, for ten policy years.

The Death Benefit of ULIP is Market Dependent

Another misconception about ULIP is that the life cover depends on the market volatility, which again, is wrong. Irrespective of the up and downs in the market, the sum assured is guaranteed and remains the same. In the event of unfortunate demise of the insured person, the insurer pays either guaranteed sum assured, or the overall corpus accrued, whichever is greater.

You Cannot Discontinue the ULIP

It is another myth that you must stay invested irrespective of the event of any uncertainty or financial emergency. ULIP allows you partial withdrawal up to some extent; furthermore, you can discontinue the policy if any financial crisis occurs. Every ULIP has some lock-in period in which if the discontinuation takes place; you need bear discontinuation charges.

To conclude, there are several misconceptions about ULIPs that you must ignore. Though ULIPs are considered to be aggressive investment plans, you can get the anticipated corpus by managing your funds appropriately. So, don’t be late, get your ULIP today!

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