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Will ULIP Be A Risky Investment For Me?

Updated On Nov 16, 2021

Awareness about management of your personal finances help you build wealth and lead a calm life. All you must do is spend some money in a way that protects your family's economic security while also meeting your own financial requirements.

So, if you want to increase your income in a short amount of time, invest in your greatest alternative. However, you must first select the appropriate investment option before you can begin. Though there are many investing options accessible in the market, if you are a newbie, it is best to start with one.

Unit Linked Insurance Plan (ULIP) is an economy savings device that allows you to invest in a variety of commodity categories. ULIP is distinct from other typical life insurance policies in that it is tied to a risk factor. This savings-cumulative-protection plan is the most popular way of investing amongst investors since it allows you to maximize your earnings by investing in different institutional investors. Before you invest in a ULIP, keep in mind that these funds are based on stock market investments. As a result, they are vulnerable to hazards and can be affected by market fluctuations, which can reduce the return on investment.

Will ULIP Be A Risky Investment For Me?

Below are a few reasons why ULIP is a safe and good investment plan:

1. Tax Benefits

It aids in the reduction of tax bills. This means that under Section 80C of the Income Tax Act, you may be eligible for tax benefits on the premiums you pay toward the coverage.

2. Long-Term Growth

One of the most significant advantages of purchasing a ULIP is that it provides long-term rewards. ULIPs have a 5-year lock-in term, which means you'll be invested for longer. When the market performs well, it will assist you in obtaining good profits. Equity funds invest in business stock and have a higher growth rate than other asset classes, but they are also riskier.

3. Dual Benefits

ULIPs not only provides life insurance but also include a variety of investment vehicles that can help you generate high returns. Balanced funds, debt funds, and equity funds all fall into this category. Depending on your needs and risk appetite, you can invest in any of them.

4. Flexibility

You can move between funds depending on your risk tolerance. You have the option of choosing from a variety of funds and investment methods.

5. Partial Withdrawal Option

If you have an unplanned medical emergency or a contingency after the lock-in period has ended, you can make a partial withdrawal. You can invest in debt funds if the market is performing poorly, but you can switch from debt funds to equity funds if the market is performing well.

In general, the risk component in ULIP investing is completely dependent on market conditions. As a result, you must keep up with current market conditions in order to be aware of trends and make appropriate fund transfers.


Depending on your requirements, there are various types of financing accessible. You can simply allocate a percentage of your savings to these funds based on your risk tolerance. Debt funds, equity funds, balanced funds, and other types of investment funds are available. If you are afraid of taking risks, debt funds are a good option because they are less risky. Equity funds, on the other hand, are designed to be liquid. Long-term investors might consider equity funds or growth funds. So, if you're willing to face risks, investing in equity funds may be a good choice.

You may also like to read - Understanding ULIPs In HDFC

Is ULIP Better Than SIP?

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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