One
cannot grow money if there is no investment. So, the foremost thing is to have
a sustainable source of income and then save the amount, to invest it later on
in some appropriate policies that will help you in doubling your sum, after
years. This is the normal process through
which maximum of us do our financial planning. But what if you come across policy, where both insurance and investments
are integrated together?
What To Look for?
Yes,
such policies exist and are termed as Unit Linked Insurance Plan. So, this is basically
a life insurance policy where the risk is
covered for the policyholder, and
even you have an investment option at the
same time that will give you the chance to invest in bonds, stocks or mutual
funds. But such investments do have market risk and is with the policyholders.
Meeting the Goals!
The
policies can be used for many purposes-
retirement, health, child’s education, marriage and even for investment
purposes. So this plan very well acts as a savings vehicle while at the same
time is loaded with benefits of the insurance contract. So when one buys units
in ULIP, the individual purchases units with a large group of investors, just
like doing it in mutual funds. Different types of ULIP offer different types of
qualified investments. So, it is a must to read the scheme prospectus carefully
before investing.
Who Should Do ULIP?
- Individuals Who Want To Closely Track Their Investments: ULIP helps investors to closely monitor their respective portfolios and even you are given the flexibility to switch funds to varying risk-return profiles.
- Having Medium To Long Term Investment Horizon: This is ideal for those individuals who want to invest for a longer duration of time.
- Individuals With Varying Risk Profiles: A choice of fund is available for all investors- from risk averse to those investors having strong risk zone.
- Investors For All Life Stages: The plan can be selected based on your current status of age, your financial needs and different liabilities at different point of life.
Advantages
There
are many advantages which you can avail time to time. Look at the points below
for understanding it in a better way.
- Market Linked returns
- Life protection, savings, and investments
- Flexibility
- Single premium
Charges
There
are different charges deducted by different insurance companies at the end.
Some of the basic charges are
- Administration charge
- Fund management charge
- Surrender charge
- Switch charge
- Premium allocation charge
- Mortality charge
- Partial withdrawal charge
Switching Between Funds
The
insurance companies allow you to switch between funds after deduction of an
amount. However, this helps in switching between debt and equity funds when the
market is volatile or even when there is a fluctuation of the interest rates. This is one of the pros of ULIP, where your
investments still tend to remain safe and secured. Even in the case of liabilities, financial standing, and risk profile, the investments can
be changed accordingly.
