Insurance

How to select the Best ULIP?

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Unit Linked Insurance Plans or rather ULIPsas they are called offer dual benefit of life coverage and market-linked investments. The premium paid under ULIPs are divided in two parts, the first part goes towards the life cover and the other gets invested in funds such as equity, debt or balanced funds. The investor can choose to invest among a range of funds as per the income source and risk appetite. The premium under ULIPS will be directed to these funds. A couple of years ago ULIP was treated as a costly product because of high charges associated in maintenance and fund management. But, after, theafter the revision of products by IRDAI in 2010-11, ULIP has proved to be the best investment plan in recent times. It is now more customer friendly and has low maintenance costs. High agent commission and charges were capped making ULIPs more viable and attractive for customers. 

Generally, financial advisors recommend separating the life cover component with the investment and hence, suggest buyers to go for pure life cover and invest in equity funds to meet their financial goals. But, if one is convinced to keep the two goals together then you can go ahead with the ULIP investment. A ULIP can be treated as a long term investment plan where the lock-in period is generally from five to eight years that helps you earn good returns. Ideally, ULIPs held for more than 10 years give higher profits as compared to ULIPs held for smaller period of time.

Investors might have to struggle to get the right information about the type of ULIPs available, funds choice, charges associated with it, etc. However, these information are available on an insurance company’s website along with the option of buying ULIP online.

One of the biggest advantages that ULIPs offer is that whatever be your financial objective, you can choose from a diverse portfolio: equity, debt and highest NAV guaranteed plans.

·         Pick a ULIP plan that offers a wide range of options across various investment vehicles such as Equity funds, Debt funds, balance funds, stocks, etc. The more options you have the better it will cater your needs.

·         Since buying an insurance policy require lots of calculations it’s always better to choose an easier mode to buy the policy.. Online platform being an ideal option. Online sites are a great place to compare policies of various companies including the costs, features and benefits.

 

·         Look for the policy term flexibility. A ULIP with a policy term of 5 to 15 years will be considered better than the one with 10 to 20 years as options are always available to surrender or switch the policy just in case you’re not happy with one.

·         Flexibility in premium payments also count a lot. Arrange for an amount that you can pay towards your premiums and then choose the one which fits into your best plan.

ULIP offer death benefit that is the sum assured or fund value, whichever is higher. Companies also offer an attractive third option as death benefit, i.e. percentage of the premiums paid, for instance 105% of premiums. This means the individual gets the higher of the three amounts – sum assured, fund value and premiums. 

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