Unit-Linked Insurance Plan (ULIP) is one of the most recommended financial instruments out of the plethora of options available in the market today. It enables you to safeguard your financial future while helping you build a corpus over time.
“What is ULIP?“, is still one of the most frequently asked questions by people. ULIP is a type of insurance policy that offers the dual benefits of life coverage and wealth creation under a single plan. It allows you to invest your hard-earned money in market-linked products like equity or safer options like debt bonds to earn significant returns in the long run. By investing in ULIP, you can choose the type of fund where you want to invest your money. One of the most important parts of investing in ULIP is that you can claim a tax deduction for the premium that you pay towards the policy under Section 80C of the Income Tax Act, 1961.
Insurers offer different types of ULIPs. So, selecting the right one can be a daunting task.
An ideal way to pick the best ULIP fund is by comparing the features of various policies. Therefore, it becomes necessary to know about the multiple offerings and terms of your ULIP fund.To ease your confusion regarding choosing the best ULIP plan, here is a list of factors that you can analyze.
- Asset allocation
When searching for the best ULIP funds, look for one that permits you to invest in various options. Therefore, it will enable you to spread your portfolio’s risk in a better way compared to your investments in one or two funds.
- Convenience of buying online
Today, it is easy to purchase anything online. The same goes for buying ULIP funds, as you can invest in them from the comfort of your home. Besides this, it becomes elementary to thoroughly go through the features of various ULIPs on the Internet. Today, most of the websites have a ULIP calculator that can help you determine and compare the premiums of various policies and the features offered by insurers. Carefully ascertain the features and benefitsto finalize a plan that can meet your long-term financial goals.
- Flexibility to switch from one fund to another
One of the biggest plus points of a ULIP plan is the possibility of switching funds. It means that you can switch from equity to debt funds or vice-versa based on the market’s performance. If the market is bullish and at an all-time high, you can transfer your investments from debt to equity funds. Similarly, if the market is falling, you can safeguard your investments by moving them from risky equity funds to the less-risky and secure debt funds. In this way, you can maximize the returns on your investment. If possible, search for a ULIP planthat offers many free switches for a long time.
- Premium redirection
While searching for the most suitable ULIP, ensure that it has a premium redirection feature. This feature gives the liberty to redirect a percent of the premium to a specific fund anytime during the policy’s tenure. For instance, if you want to divert 50% of your investment to debt funds, then until further instructions, 50% of the premium will be invested in debt, and the remaining 50% will be invested in equity funds. The policy should allow you to increase or decrease the percent of your investment at any given time.
ULIP can help you generate wealth to achieve your long-term financial goals. So, review all the features and benefits of ULIP funds, and select the one that suits your requirements.
