A Unit Linked Insurance Plan is a type of life insurance that provides life cover to the insured person along with different investment options. Though the plan seems to be offering adequate benefits, you need to understand and remember few things while choosing a ULIP. Here is the list of the things-
Insurance or Investment
ULIPs offer both coverage and investment options, but it needs to be remembered that the pure life insurance policies such as term policies always pay higher than investment insurance policies. Though ULIP focuses more on investment and cash-value benefits, the life cover offered is low as compared to term plans.
Long-Term Investment
ULIPs are comparatively low-risk investment plans; hence it is needed to anticipate the better returns after a long term. While purchasing the plan, make sure that the financial goals are set for the period which matches with the ULIP. You’ll get some returns in the short-term, but it will not be the real pay-off of the ULIP.
Service Charges
ULIPs possess several charges as the processing fee, e.g. premium allocation charges, fund management charges, administration charges, and so on. These charges are incurred in the premium amount, but ultimately the premium amount is raised due to these charges.
Accessibility to Different Funds
Many insurance companies offer ULIPs with, one on the other hand, similar specifications. But, you need to ensure that the plan you are choosing provides the accessibility to invest in different funds such as debts, equities, bonds, and other market linked funds. On an average, there are 6-7 funds available you can choose from.
Flexibility
You need to choose the best flexible plan suitable for you. Eventually, the long-term investments harvest greater returns. Enlist your future financial requirements and accordingly choose the ULIP that will provide you adequate investment benefits.
Death Benefits
It is to be understood that the ULIP pays-out the higher of sum assured or the fund value or the premiums paid till date. Whereas, some insurers may change the terms subject to the conditions.
Comparison between Available Plans
Always compare different ULIPs before opting out for the one from your regular insurer. Aggregator websites allow you to compare between different ULIPs. Make a comparison based on several factors and choose the right ULIP best suited to your requirements.
By considering all these things, you can select the best ULIP suitable to your future needs. Make a wise decision by choosing the right ULIP, today!