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Things to Consider While Buying a Unit Linked Insurance Plan

Published On Aug 01, 2021

In addition to providing life insurance cover, ULIPs also allow for the creation of a savings account. For those that live to the conclusion of their tenure, there are additional maturity incentives available. Upon the untimely death of the insured, the money assured is paid to the specified beneficiary. While purchasing a ULIP, you should keep the following tips in mind.

Things You Should Consider While Buying a Unit Linked Insurance Plan

You should consider the following before investing your money in an endowment plan - 

1. Compare ULIP Coverage Options

Next, you'll want to analyse the ULIP offers in the market to choose which one will assist you reach your financial goals. You can compare background expenses, premiums paid, ULIP performance, etc., in order to make an educated decision. The ULIP's investing type should also be investigated in order to determine the return on investment.

2. Calculate The Risk Factor

A portion of the premium you pay for a ULIP policy is invested in the stock market. Because high-risk funds guarantee large returns, investors are compelled to invest in them. Any ULIP investment, however, should be made with your risk appetite in mind. You can even request that your insurance provider assist you in making the best financial selection possible.

The types of funds to which you should direct your ULIP investment are as follows:

  • Stocks, bonds, and equity securities are all included in equity funds. It carries a very high level of risk.
  • Debt Funds: Directing your ULIP investments into mutual funds or exchange-traded funds is one way to invest in debt funds. Debt fund ULIP benefits can be realised at significantly lower-risks than equity fund benefits.
  • In a balanced fund, you invest in a mix of equities and debt funds. The level of risk is medium.

3. Check the Investment Tenure

In the case of ULIPs, the 5-year lock-in term applies. ULIP insurance coverage terminates instantly if surrendered during the first three years of purchase. But the surrender value can only be paid after three years have gone by.
ULIP Plans can fetch you higher returns under favourable conditions in the long run.

4. Coverage Available

Most agents would urge you to choose for the least sum assured, presumably in order to increase the amount invested and, therefore, earn better returns on the investment made. If you are able to, choose a higher amount, as the mortality charges are often minor and this will not negatively impact your retirement fund in the long run. A life insurance policy must support your family when you pass away, so keep this in mind when purchasing one.


If you're considering a plan, the qualities described above can help you sort through the many options. Along with financial stability, a unit linked plan offers compounding advantages and encourages long-term investments. There is no doubt that it is an excellent investment for those who are considering it.

Also read - Which is the best Unit Linked insurance plan in India in 2021?

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