6 Myths About Investing in ULIPs

Unit Linked Insurance Plans (ULIP) is the investment product that offers savings with insurance. However most people are sceptical about investing in ULIPs because of the misconception and myths associated with the product’s objectives, liquidity, returns, functioning, and pricing.

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Top ULIP Funds
Fund Name
AUM
Returns (in %)
3 Year
5 Year
10 Year
11,839 Cr
Returns
21.83%
Returns
23.81%
Highest Returns
Returns
19.95%
Get Details
1,772 Cr
Returns
23.15%
Returns
27.3%
Highest Returns
Returns
19.47%
Get Details
6,136 Cr
Returns
26.84%
Returns
27.87%
Highest Returns
Returns
18.81%
Get Details
2,984 Cr
Returns
21.78%
Returns
23.76%
Highest Returns
Returns
17.76%
Get Details
4,172 Cr
Returns
21.74%
Highest Returns
Returns
20%
Returns
17.43%
Get Details
Fund Name
AUM
Returns (in %)
3 Year
5 Year
10 Year
247 Cr
Returns
11.88%
Returns
13.92%
Highest Returns
Returns
11.99%
Get Details
352 Cr
Returns
12.26%
Returns
12.56%
Highest Returns
Returns
11.38%
Get Details
526 Cr
Returns
9.79%
Returns
10.72%
Highest Returns
Returns
10.34%
Get Details
837 Cr
Returns
11.67%
Returns
11.81%
Highest Returns
Returns
10.23%
Get Details
22 Cr
Returns
12.6%
Highest Returns
Returns
11.89%
Returns
10.17%
Get Details
Fund Name
AUM
Returns (in %)
3 Year
5 Year
10 Year
494 Cr
Returns
16.43%
Returns
17.28%
Highest Returns
Returns
15.3%
Get Details
242 Cr
Returns
6.94%
Returns
7.91%
Returns
8.81%
Highest Returns
Get Details
786 Cr
Returns
5.4%
Returns
6.88%
Returns
8.1%
Highest Returns
Get Details
302 Cr
Returns
5.86%
Returns
6.8%
Returns
7.79%
Highest Returns
Get Details
465 Cr
Returns
5.1%
Returns
6.93%
Returns
7.78%
Highest Returns
Get Details

Here, we clear some of myths linked to ULIPS:

MYTH 1: ULIPs are costly.

  • Reality: Because of the high premium allocation and fund management charges, many people consider ULIPs as a costly investment instrument. However, this was a thing of the past. Earlier, the charges were as high as 6-10%, but now IRDAI brought down the annual charges to 3% for the first 10 years of holding and 2.25% for more than 10 years of holding. Now low cost ULIPs have charges much lower than before and are affordable to all.

MYTH 2: ULIPs are risky instruments.

  • Reality: The reason that the money in ULIPs is only invested in the equity market makes it a risk instrument. However, the intensity of risk associated with ULIPs can be selected on the basis of funds with different objectives. . You can invest in a conservative fund by settling for a debt-oriented fund or opt for an aggressive fund if you are a risk-taker. It also gives you an option for selecting a mix of equity and debt fund known as a balanced fund. Additionally, you have the option of switching funds depending on your risk appetite and need of time.

MYTH 3: ULIPs are not for investing surplus funds.

  • Reality: If not at the beginning, you can, at any time top up the ULIPs when surplus funds are available. The top-up premium can be paid anytime during the tenure of the existing ULIP policy and offers the same tax benefits as regular premiums.

MYTH 4: ULIPs cannot be discontinued.

  • Reality: After completion of the lock-in period of 5 years, you can, at any time discontinue investing in ULIPs. n doing so, you will not be required to deposit any type of surrender charges.

MYTH 5: Life cover decreases with market volatility.

  • Reality: Many people have the misconception that because ULIPs are linked to equities, the market returns affect the life cover. However, the life cover remains the same and ULIPs either pay the complete life cover or the fund value, whichever is higher, if the investor dies.

Invest more and Get more with ULIP Plan Invest more and Get more with ULIP Plan

MYTH 6: ULIPs do not have health and accident cover

  • Reality: Since ULIPs offer insurance cover along with investment, just like any other insurance plan it too has rider options such as Accidental Death Benefit (ADB), Waiver of Premium (WOP), Family Income Benefit, Hospital Cash Benefit (HCB), etc. In case of such extremities or calamities, one can benefit from the partial withdrawals to meet their additional cash requirements.

ULIPs have been in market since long and have been offering good returns. This modern and traditional investment mix offers flexibility of switching funds along with easy withdrawal for your current requirements making it a necessary investment tool in your financial planning. If you do not wish to get into the hassles of individual planning, a ULIP with few riders may be the solution.

You may also like to read : ULIPs Are A Little Tricky But Easy To Make Good Money

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
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~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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