How to Choose The Right ULIP Plan In 5 Easy Steps

Unit Linked Insurance Plans or ULIPs as known popularly, are one of the most reliable market-linked financial instruments that offer investors dual benefits.  Unlike other insurance policies, Unit Linked Insurance Plans offer a combination of both investment and insurance to their customers. This article will highlight how the Unit Linked Insurance Plans work and how one can choose the right ULIP plan that will offer maximum returns.

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Top ULIP Funds
Fund Name
AUM
Returns (in %)
3 Year
5 Year
10 Year
1,663 Cr
Returns
26.72%
Returns
27.01%
Highest Returns
Returns
20.76%
Get Details
2,894 Cr
Returns
24.45%
Highest Returns
Returns
22.83%
Returns
18.66%
Get Details
2,337 Cr
Returns
23.41%
Highest Returns
Returns
19.4%
Returns
17.94%
Get Details
961 Cr
Returns
20.27%
Highest Returns
Returns
18.65%
Returns
17.15%
Get Details
6,464 Cr
Returns
19.12%
Highest Returns
Returns
17.41%
Returns
16.85%
Get Details
Fund Name
AUM
Returns (in %)
3 Year
5 Year
10 Year
11,380 Cr
Returns
24.25%
Highest Returns
Returns
23.2%
Returns
21.58%
Get Details
1,340 Cr
Returns
30.17%
Highest Returns
Returns
23.17%
Returns
19.65%
Get Details
5,651 Cr
Returns
29.27%
Highest Returns
Returns
26.75%
Returns
19.47%
Get Details
4,058 Cr
Returns
26.02%
Highest Returns
Returns
19.28%
Returns
19.28%
Get Details
5,938 Cr
Returns
24.72%
Highest Returns
Returns
18.51%
Returns
18.52%
Get Details
Fund Name
AUM
Returns (in %)
3 Year
5 Year
10 Year
241 Cr
Returns
13.58%
Returns
14.47%
Highest Returns
Returns
12.81%
Get Details
344 Cr
Returns
13.28%
Highest Returns
Returns
12.53%
Returns
12.17%
Get Details
523 Cr
Returns
10.86%
Returns
10.83%
Returns
11.04%
Highest Returns
Get Details
836 Cr
Returns
13.3%
Highest Returns
Returns
11.91%
Returns
11.02%
Get Details
21 Cr
Returns
13.59%
Highest Returns
Returns
11.77%
Returns
10.81%
Get Details
Fund Name
AUM
Returns (in %)
3 Year
5 Year
10 Year
487 Cr
Returns
19.06%
Highest Returns
Returns
16.57%
Returns
16.12%
Get Details
243 Cr
Returns
7.25%
Returns
8.16%
Returns
9.18%
Highest Returns
Get Details
777 Cr
Returns
5.17%
Returns
7.26%
Returns
8.29%
Highest Returns
Get Details
305 Cr
Returns
5.9%
Returns
7.06%
Returns
8.07%
Highest Returns
Get Details
466 Cr
Returns
4.96%
Returns
7.46%
Returns
8.05%
Highest Returns
Get Details

What are ULIPs?

ULIPs are a mix of investment and insurance. A ULIP enables plan holders to attain their objective of wealth creation through investing in equity funds or debt-based funds or both by their long-term goals. One of the popular investment tool, ULIPs help you achieve your life goals with systematic investments.

Key Features of ULIP

Let us look at the key features of ULIPs to have a better understanding

Parameters ULIPs
Instrument Type Insurance coverage and investment returns benefit
Investment Mix Funds can be invested in the debt and equity market or both
Tax Benefit The tax benefit is offered under Section 80C and 10(10D) of the Income Tax Act
Switching Option Free switching is available up to a specific number
Life Cover The benefit of life cover to the family of the life assured
Lock-in Period ULIP comes with a 5 year lock-in period
Investment Regulated By IRDAI
Death Benefit The death benefit is paid to the nominee of the policy in case of uncertain demise
Fund Management Charges 1.35% (May vary with insurer)

There are several Unit Linked Insurance Plans in India. It is important to choose the right plan that suits your needs and requirements so that you gain maximum profit in the future.

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

Here are 5 easy steps that can help you choose the right Unit Linked Insurance Plan

  1. Check The Life Protection Cover

    Unit Linked Insurance Plan is a combination of investment and insurance. Sometimes, while considering the investment return part, insurance coverage is neglected.

    While purchasing a ULIP policy it is important to make sure that the sum assured covers enough to protect your family at the time of financial crisis even if you are not there to look after them. Hence, life protection cover plays an important part as the investment coverage when it comes to Unit Linked Insurance Plans.

  2. Choose The Plan with Higher Fund Option

    The primary focus while purchasing a ULIP policy is to make sure that it offers diverse fund options to the insured. A limited number of market-related funds seize the chances of better ULIP performance.

    While investing in ULIPs, one can choose between debt funds, equity funds, or a mix of both according to their requirements. Equity funds, on one hand, offer higher growth potential for the long term, Debt funds on the other hand helps you save your wealth.

    You need to keep a balance between these funds as per your requirements.

  3. Select a Plan Based On Your Personal Investment Goals

    As an investor, if you want to meet your desired financial goals in the future, it is important to make smart investment decisions at the present. Be it your post-retirement life, your child’s future education, your dream goals, your family’s future, or any other future financial requirements, it is important to outline your personal investment goals carefully.

    Once you identify your future financial needs it becomes easy to choose the right Unit Linked Investment Plan that matches your life goals.

    Invest in high growth ULIP Plans Invest in high growth ULIP Plans
  4. Know Your Risk-Taking Appetite

    Risk-taking appetite is an essential factor not just while buying a policy but in general life as well. When it comes to purchasing a Unit Linked Insurance Plan,

    • Equity funds are associated with higher risks while

    • Debt funds are associated with lower risk compared to Equity funds

    The main factors determining your risk-taking appetite are:

    • Age

    • Income

    • Financial corpus

    • Several dependents, etc.

    Being aware of your condition keeping in mind the abovementioned factors will help in making a better decision while choosing the right ULIP plan.

  5. Check ULIP Policy Charges

    In Unit Linked Insurance Plan (ULIP), the entire amount is paid as a premium, and nothing is used to purchase units. The insurance company, as per their policies, deducts certain charges before allotting their units. The remaining premium amount is allocated in different asset classes such as debt, equity, or both.

    Even though the charges against ULIPs may vary from company to company, the standard charges that you have to look out for, include the following:

    • Fund Management Charges

    • Premium Allocation Charges

    • Policy Administration Charges

    • Surrender or Discontinuance Charges

    • Partial Withdrawal Charges

    • Mortality Charges

    • Switching Charges

    • Guarantee Charges

    • Rider Charges

Who Should Buy ULIP?

  • >People who cannot separate their investment and insurance needs and are willing to keep them together rather than buying and handling different schemes should go for ULIPs.

  • People who are looking for long-term investments, say for around 15-20 years, should go for ULIPs.

If a person is looking forward to investing in these 2 abovementioned conditions, then they should undoubtedly go for Unit Linked Investment Plans.

Wrapping It Up

Purchasing a Unit Linked Investment Plan should be a well-thought decision. If you have bought a Unit Linked Investment plan, it is advisable not to opt out of it at an early stage.

Keeping all the factors affecting ULIPs in mind, one should invest in the right plan that gives maximum profits in the future.

*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.
+Returns Since Inception of LIC Growth Fund
~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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