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How ULIPs Help You Stay Assured And Invested?

Updated On Dec 25, 2021

ULIPs are life insurance policies that offer policyholders both investment and life insurance coverage. The plan's premiums are invested in the stock market. Following that, premiums rise in tandem with market growth. The Fund Value of the plan is determined by the number of premiums that have been invested and the amount of growth that has been achieved. The higher of the Sum Assured or the Fund Value is paid if the assured dies within the duration of the plan. If the plan reaches maturity, the available Fund Value is paid and the plan is cancelled.

In comparison to standard insurance policies and other investment options, ULIPs provide a number of advantages. 

  • They give market-linked returns that aid in the accumulation of wealth. As a result, they accumulate an inflation-adjusted corpus.
  • ULIPs offer unrivalled flexibility thanks to the advantages of partial withdrawals, top-ups, and switching. Policyholders can use it to manage and strategize their investment portfolios.

How ULIPs Help You Stay Assured And Invested?

ULIPs also provide advantages that can help you not only safeguard your future and satisfy your family's financial demands but also collect substantial returns over time. Let's have a look at some of the primary benefits that ULIP has to offer.

  • Systematic Investments

ULIPs encourage the use of a systematic approach to investing. You can profit from rupee cost averaging, which smooths out the highs and lows of a changing market, by investing regularly in little amounts over time. Investor B invests the same amount of money, Rs 90,000, in six monthly instalments of Rs 15,000, and buys the identical equity share at different pricing. Investor B was able to purchase more units at the end of the six-month term, even though both investors had invested the same amount. In this way, rupee cost averaging can help you cut your average buy expenses while also allowing you to take advantage of price swings based on market conditions.

  • Investing Alternatives Abound

You can invest in ULIPs in a variety of ways. Depending on your risk profile and investment preferences, you can invest in pure stock, debt, or a combination of both.

  • Switch

Do you want to switch your investments between equity and debt funds? The switch is a feature provided by ULIP. You are only allowed to use a certain number of switches before being charged extra. The majority of insurance policies provide for a certain number of free switchovers per year.

  • Get More

You can always go with a single premium upgrade. These enhancements enable you to invest more funds (in addition to your monthly premium) as and when needed. However, it is subject to specific circumstances, and the terms and conditions of different insurance policy firms vary.

  • Better Returns

A ULIP is for you if you want higher returns than other insurance policies. Because of their equity advantage, ULIPs produce higher returns than any other insurance product. ULIPs invest your premiums in a variety of asset types via various funds. Although tax-saving funds have a track record of providing double-digit returns, one key benefit is that you don't have to seek a new fund every year. In the case of ULIPs, this is not the case. Renewals of ULIPs are concerned with tax savings.

Conclusion

ULIPs expand the capabilities to choose investments depending on the risk tolerance. Most ULIPs have a huge spectrum of equities, debt, and alternative investments to choose from, and also the ability to switch funds if your economic position changes.

Also read: 

Why ULIPs Are For Wise Investors?

Mistakes You Should Avoid While Purchasing ULIPs

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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