Life is full of uncertainties. Therefore, it becomes imperative to possess a financial plan that would secure the future.
Currently, there are several investment products available in the market that you can choose based on the financial security you want to achieve. As you work towards being financially independent, it is important to have a backup plan in place for uncertain and unfortunate times. A life insurance plan comes in handy as it safeguards the financial future of your family and loved ones.
But your life insurance plan only ensures a life cover. What if you want to invest to earn higher returns and get more out of your life insurance plan? Well, there is a plan called a Unit-Linked Insurance Plan or ULIP Insurance.
You can achieve both the objectives of life insurance and investment with this plan. A ULIP is a hybrid product that takes care of insurance and investment needs.
It certainly eases your long-term financial planning and helps you reap the maximum benefit. With the Unit-Linked Insurance Plans, you can also enjoy tax benefits.
What are the benefits of a Unit-Linked Insurance Plan?
If you are looking to secure your retirement years, save for your child’s higher education or even for their marriage, then you can do so easily with a ULIP. You also get a life cover with a death benefit. In case of your uncertain demise, your family will receive the sum assured.
If you survive the tenure of your ULIP, then you will get the maturity value. As per your risk appetite, you can choose to invest in equity or debt funds. You can invest in both by deciding the percentage of the money to be invested in each type of fund.
What are the best premium allocation practices?
A ULIP provides you with dual perks of investing and insurance. You get a chance to invest in equity funds, debt funds or both.
Your total premium is divided into units of a specific value. You, as an investor, are provided with units as per the amount you choose to invest.
The value of every individual unit is called the net asset value (NAV). The NAV is responsible for keeping tabs on the performance of your funds. It marks and denotes the growth and fall of your fund value.
If you choose to withdraw some money from your investment in the middle of your policy term, then those units will be sold to get you the partial money. After the maturity of your life insurance policy, you can choose to withdraw money at regular intervals rather than once.
If your risk-taking capability is low, then make sure to invest more units in debt funds as they are less volatile compared to the equity funds. If you want to take more risks to gain higher returns, then you can choose to invest in equity funds. Thus, make wise decisions when allocating the funds in the debt and equity funds.
