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Know Which ULIP Fund To Invest In?

Updated On Dec 16, 2021

ULIP is a financial product that combines the finest of both finance and insurance divisions. ULIP, or Unit Linked Insurance Plan, is a hybrid product offered by insurance firms that provide both security and wealth growth. Because ULIP is a market-linked investment product, it allows investors to profit from the capital market. When compared to other insurance products offered by insurance companies, the ULIP is organized differently. ULIPs have historically provided 12-15 percent returns on long-term investments, according to past performance. Long-term returns on large-cap stock mutual funds have been comparable.

The amount invested as a premium is then weighed against the previously listed charges. Life insurance is provided with a portion of the net premium (which is also subtracted as mortality charges). The remaining share was invested in the capital market through funds that included variable proportions of equities, debt, and money market securities. You can make your investments based on the plan options and fund selections offered by the ULIP. Risk ratings will be assigned to each fund. A 5-year lock-in period is included with ULIPs.

Know Which ULIP Fund To Invest In?

Below are a few things you must know about a ULIP so as to invest wisely:

  • Determine Your Risk Tolerance And Invest In Funds That Match It

When it comes to market-linked ULIP investments, the ability to take risks is the most important consideration. The old adage goes that the larger the risk, the higher the return. Also, when one is young, one may afford to take a greater risk. It is vital to select the most appropriate ULIP and establish the most appropriate investment money in order to be aware of the risk capacity. In addition, ULIP provides fund switching options. Consider how many free switches you have so you can switch from one fund to another based on market conditions and your changing demands.

  • Estimate The Insurer's Financial Stability And Fund Performance

Examine the fund performance of the ULIP you've chosen while determining the ULIP. To understand how the fund reacts to market volatility, the consistency of fund performance must be analyzed. Although previous performances may not necessarily indicate what to expect in the future, they do offer you an idea of what to expect. When choosing a ULIP, it's also important to look at the insurer's financial stability and soundness by looking at the solvency ratio.

  • Make Sure You Have Enough Life Insurance

As an insurance product, ULIPs protect your family by extending life insurance coverage. This life insurance protects your loved ones financially even if you are not present. As a minimum life cover, utilize ten times the ULIP premium. ULIP investments can supplement your existing comprehensive protection plans by providing additional coverage. Before you invest, understand the terms and conditions of your plan to ensure that you are adequately protected.

  • Decide On Your Investment Objectives

To achieve your life goals, it is critical to carefully organize your finances. Whether it's your post-retirement life, your child's desire of becoming a doctor, or acquiring your ideal home, each life event must be meticulously planned. It's critical to set your goals and begin investing as soon as you have a firm grasp on the time frame and projected funds needed to achieve them. In each parameter, you can select the ULIP that best meets your objectives.

  • On A Cost-Benefit Basis, Compare The Two

Riders, top-ups, and a variety of other benefits are available with ULIPs. It's crucial to weigh the pros and cons of different ULIPs, as this will help you make an informed decision.


ULIPs give investors more freedom, but they are still long-term investment vehicles. ULIPs are ideal for risk-averse individuals and those seeking additional insurance and market investment options. The capital market is where the ULIP invests. The investor, on the other hand, requires the ease and flexibility to choose based on his or her risk profile and financial objectives. Long-term and medium-term financial goals are well-suited to ULIPs.

Also read - ULIPs Or Mutual - What To Choose?

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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