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Can ULIPs Be Used For Retirement Planning?

Published On Oct 24, 2021 10:00 AM By InsuranceDekho

We strive to improve the future throughout our lives. As students, we work hard in order to have a successful career. We also strive ourselves in our professional lives to ensure a joyful and carefree retirement. While hard work is necessary to reach your objectives, it should be accompanied by sound financial planning.

Your monthly cash flow will stop after you retire, but your bills will not. In reality, due to the necessity for healthcare expenses, they may rise in the future. To cover these costs, you'll need to start putting money aside to develop a pension fund. Unit Linked Insurance Plans (ULIPs) are an appealing retirement planning alternative.
ULIPs combine the advantages of both insurance and mutual funds. The product's intrinsic nature aids you in making plans for a happy retirement.

Can ULIPs Be Used For Retirement Planning?

Let's have a look at the features that make ULIPs such a valuable financial instrument.

1. ULIP Allows For Switchability

Consider the following scenario. You began investing in ULIPs while the stock market was performing well. You chose an equity-based fund as an informed investor. After a few years, the market has tanked, and you'd rather put your money into a more secure debt option. What are your plans? ULIPs allow you to switch funds based on their performance. Most financial institutions provide four free swaps per year. It allows you to transfer your money around to achieve the best results.

2. Riders And Top Up

If you have extra money to invest in a higher-yielding fund, ULIPs allow you to do so by paying top-up premiums. You can easily add the extra funds to your existing plan for a modest fee. Top-up premiums are typically 1% to 3% of the total premium, which is far less than purchasing a new policy.

You are at your most stress-free when you are retired. Money should not be an issue for your daily activities here. ULIPs take care of that while also allowing you to enjoy some indulgences. You can keep track of how your money is performing and where it is invested as an investor. You will have access to all of the information via the internet.

3. ULIP Provides A Wide Range Of Choices

Nobody's risk appetite is the same as another's. ULIPs recognize this and offer a wide range of investing possibilities to the investor. There are three fundamental types of funds to choose from.

  • Equity funds are those in which the primary concentration is on investing in stocks.
  • Bonds, government securities, and other debt securities are the focus of this investment.
  • A balanced fund is a combination of the two.

There are various funds under the three main possibilities, with an almost infinite number of permutations. There is a particular fund for everyone based on the company, sector, equity, and debt percentage-wise combinations. You have the choice of selecting the finest solution for you. Not only that, but you can alter the fund selections as well.

4. A ULIP Ensures A Higher Rate Of Return

When it comes to investing your hard-earned money, two things come to mind: security and returns. Both are provided by ULIPs. ULIPs have significantly greater average returns than other investment options such as bonds, endowment plans, FDs, pension plans, and so on. The fact that the money is invested in the stock market is the cause for such high returns. Because of diversification and competent fund management by experts, you enjoy the benefits of the equity market at a considerably lower risk than the actual equity market.

5. The Ability To Modify The Amount Of The Premium

Policyholders have the option of paying a single premium in full at the start of the policy term or paying recurring installments. Regular premiums are pre-determined sums that the policyholder must pay on a regular basis, such as annually, semi-annually, quarterly, or monthly. You can pay a top-up sum on top of your existing premium with ULIPs.

6. The Ability To Choose A Rider

ULIPs allow you to personalize your plan and add extra protection by selecting optional features or riders. The Unit Linked Accidental Disability Benefit rider is one of the most common riders available. The ability to personalize plans is one of the best aspects of ULIPs.


ULIPs are a unique offering, and companies are launching them to meet a variety of buyer goals. People are increasingly purchasing ULIPs as part of their retirement planning and life goals. But, after purchasing a ULIP, have you considered looking into pension programs further? While ULIPs are useful for retirement planning, pension plans offer a distinct set of benefits. Even if you currently have a ULIP in place, pension plans are worth considering.

You may also like to read - ULIPs - No More High-Cost Insurance Solution

Top 3 Reasons That Make ULIP Better Than Mutual Funds

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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