ULIPs (Unit Linked Insurance Plans) are nothing but a type of life insurance that offers both investment and life cover to the policyholder. ULIPs are often considered as aggressive investment plans wherein the risk of getting expected returns is considerably higher. Therefore, it is always important to choose the best ULIP plan. Here are three ways that help you get the best from a ULIP. Read further to know more.
Choose the Right Amount for Life Cover
ULIPs are meant to help you gain the sizeable corpus which is further helpful to achieve several goals such retirement planning, or your children’s education and marriage. Along with the corpus, a ULIP provides life cover to the family. A lump sum amount is offered as the sum assured which further helps your loved ones to sustain their lifestyle. It is always advised that the minimum life cover should be at least ten times the income. If found inadequate, you have an option to increase the life cover at additional premiums.
Determine the Goals and Select Appropriate Funds
Unlike traditional investment plans, a ULIP plan provides you with an option of investing your money into market-linked products such as equities, debts, or a blend of both. Debts are low-risk funds, whereas equities are considered to be aggressive and high-risk funds. As per your risk appetite and future financial goals, you can choose to invest in either debts or equities. Similarly, you have a choice to invest in balanced funds which is a mix of debts and equities. Switching between the funds is allowed during the policy tenure; thus analysing the returns achieved from the earlier funds, you can restructure your investments.
Get a Long-Term Investment
ULIPs are often purchased for wealth creation, which helps to achieve the desired financial goals. But, it should always be kept in mind that ULIP plans are designed to offer returns after a long-term. Though the returns are hooked on the market performance, choosing ULIP plan for a short-term may not give you anticipated returns. Moreover, staying invested for long-term may help you gain different bonuses form the insurance company for being a loyal customer.
These are the three most important ways to get the best from the ULIP plan. Choose the best ULIP plan, and get maximum benefits to achieve your desired financial goal.