When buying a life insurance policy, a ULIP investment or Unit Linked Insurance Plans are the most popular choices in India due to the dual benefits of market-linked returns and life cover. A ULIP plan also has numerous benefits which are beyond a standard life insurance policy. And this particular reason makes a ULIP policy a good investment tool for an individual.
What is a ULIP Plan?
A ULIP investment is a life insurance plan with some added benefits for wealth building. The insurer divides the capital amount you pay for a ULIP policy and invests one part in the market – equity, debt, or a mix of both fund types. The life cover in the ULIP plans will protect the financial goals of your family in your absence. And the market investment will help you create a significant fortune over some time.
When it comes to investments in India, ULIPs are very flexible. Here, you will have the freedom to choose your funds where you’ll invest your money, and also, you can switch on to your preferred funds in the future as per your needs. Also, different kinds of ULIP plans are available in the market. So, before purchasing one, always consider asking yourself these very important questions to pick the right plan for yourself.
- Is the ULIP Plan Suitable to Your Needs?
Before selecting the ULIP policy, make sure that it is suitable for meeting your future financial goals. In case you wish to earn better ULIP returns, it is important to keep your money invested for a long time. However, in case of financial emergencies, you can go for partial withdrawals from your ULIP investment. But remember that you can only do this once the five-year lock-in period is over.
- What Should Be Your Ideal Sum Assured?
When selecting the ULIP policy, you should always opt for an adequate sum assured, which can help you meet the financial needs of your beneficiaries. So, go for a ULIP plan which can cover your family’s financial goals in the future, in your absence. The sum assured will depend upon the premiums you pay. So, choose your sum assured amount carefully before investing.
- What Are the Charges for ULIP Plans in India?
Always remember that the insurance company will charge you some additional fees when selecting a ULIP plan. There are a few insurers who can charge a high amount from the policyholders. However, you should know that the Insurance Regulatory and Development Authority of India (IRDAI) has mandated some changes in its policy, resulting in lower charges and more returns for the individuals.
The ULIP policy charges will include the fund management fee, administrative fee, premium allocation fee, mortality fee, etc. Hence, while purchasing ULIP insurance, do find out more about the expenses related to it.
- What Kind of ULIP Flexibilities You’d Receive?
A ULIP investment is a life insurance plan with some added benefits for ULIP investment has become a favoured investment policy in India for several reasons. And one of them is the fact that ULIP plans are flexible. The policyholder can go for top-up options, fund-switching, premium redirection, partial withdrawals, and a lot more.
However, you should also be aware that some of them come with limits on how many times you can go for withdrawals or switch funds for free as well. So, always find these out before investing in a ULIP plan.
- How Did a Particular ULIP Plan Perform in the Past?
Your ULIP returns will depend upon the market conditions. This is because a part of your plan will be invested in the market by your insurer. Hence, you need to inquire about the past performance of funds before investing in a particular ULIP plan. This will provide you with an idea about the estimated ULIP returns you will receive from your policy in the future. For instance, Tata AIA ULIPs offer quite a few 5-star funds for investment.
- What Are the Extra Benefits that You Can Expect?
Apart from the death and maturity benefits, you can expect other advantages from your ULIP plan. Today, ULIP policies also offer loyalty additions and guaranteed additions. These top-up features can provide you with more returns at a specific interval, ensuring higher profits in the future. So, when selecting a ULIP plan, do check if it provides these added benefits or not.
If you have decided on purchasing a ULIP plan, it is better to choose one online. You can also check the premiums through a ULIP calculator online, which can make your purchase better.