How To Select The Best ULIP For Your Portfolio?

ULIPs provide financial protection to the policyholder’s family against any crises that could arise after his/her demise. It also enables the life assured to receive a regular benefit in case he/she is alive. Selecting the right and ideal ULIP plan is important and to choose it, one should always evaluate his/her needs and risk appetite.

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How To Select The Best ULIP Plans? 

Let’s understand how a policyholder can select a good ULIP for him/herself and his/her family:

ULIP plan offers a wide variety of benefits and is considered as one of the good investment options available in the market if selected appropriately. In this, you are required to pay the premiums like any other policy. A part of the premium is invested in the investment element, and the other remaining part is invested in the market to receive better returns. ULIP provides an option to select the amount of coverage so that policyholder’s family will remain financially protected even if someday something happens to him/her. Moreover, ULIP plans also provide policyholders an opportunity to earn from the market investments. 

  1. Ability To Handle Risk 

    One of the important elements while selecting the best ULIP plan is to be aware of the capacity of taking risks. At an early age, you can take bigger risks in life. However, your risk handling capacity decreases when you have dependents in your family. Illness is also a factor that decreases your risk-taking ability. Risk-taking capacity helps in choosing which ULIP plan is the right insurance product. Equity funds are the better option for investors who can take big risks. Life insurance providers offer various ULIP fund options. These fund options support fulfilling your life objectives. Before purchasing the policy, a policyholder should also check if the ULIP plan offers a fund switching option or not. With the help of the fund switching option, one can switch from one kind of fund to the other type as per the conditions of the market. 

  2. Personal Investment Objectives 

    To meet the life goals financially, the policyholder has to make a smart decision. These life goals can be buying a new house, child education, marriage, and all other related expenses. So, it is very important to determine the objectives of life before choosing the right option for investment. 

    Nowadays, Unit Linked Insurance Plan - ULIP has become a common and popular life insurance product in the Indian insurance industry. It provides financial security cover against any unfortunate event or risk of death. Moreover, it also offers different options for investments. The life assured has the option to invest in several funds such as mutual, bonds, and stocks. The investments are subject to risks of the capital market under this plan. Therefore, to select the best ULIP plan, it is always recommended to make a wise choice of investment funds after considering the risk of appetite and requirements. Choose the plan wisely and invest in ULIP plans smartly. 

Important Parameters To Choose The Best ULIP Plans 

Here are the following parameters that one should follow to find a right and an ideal ULIP plan: 

  1. Determine The Risk Associated With The Specific Investment Fund 

    As we have already discussed above, that different ULIP plans possess different amounts of risks. So it is very important to understand your capacity to take a risk. It is advisable to not invest in a fund having high risk unless you are sure that you will get good returns from it. 

  2. Check The Life Coverage 

    While buying a ULIP plan, always be aware of the death benefits available under the same. A right ULIP plan will offer you a good death benefit that will be highly advantageous for you and your family in the future. 

  3. Identify Your Investment Objectives 

    Why do you want to buy a ULIP plan, should be your first concern. You want to purchase a house or want to save for your child's education, so every kind of investment has a particular goal. Always check your investment goals so that you can choose the right plan. 

  4. Long Time Investments 

    ULIP plans are long-term plans so you can also think of planning your retirement with the same plan. Particular ULIP plans are available in the market which are specially designed for your retirement years. These plans provide a regular payout after the end of the plan and let you enjoy your golden period. 

    *All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
  5. Comparison 

    Comparison is very crucial to select the right plan. Nowadays, comparing ULIP plans are quite easy online as the process takes a couple of minutes. 

  6. Life Cover Of Right Amount 

    As mentioned earlier, one of the major aims is to meet the financial requirements of the policyholder. These milestones can be a child’s education, child’s marriage, or savings for his/her retirement. Moreover, ULIP also offers life coverage to achieve the dreams of policyholder’s dependents. The policy provides a lump sum amount to the selected nominee in case of an unfortunate event. The plan also offers a minimum coverage of 10X of the annual premium. 

  7. Tax Benefits 

    Apart from all these benefits, ULIP also offers tax benefits on paid premiums. The tax deductions were applied as per the prevailing laws of the Income Tax Act, 1961. 

  8. Analyze The ULIP Charge 

    In the ULIP plan, the premium amount you are paying to the insurer is invested into the selected fund options. These fund options are debt and equity additions after the deduction of all the appropriate charges. These charges are divided into categories such as premium allocation, surrender, mortality, fund management, fund switching, and discontinuance charges.

Wrapping It Up!

With the advancement in technology, comparing, and selecting the right insurance product is not very difficult. It would be smart to compare and purchase various ULIP plans online on an insurance comparison platform to check the features, benefits, terms, and conditions to align the same plan with your risk appetite. These insurance cum protection plans should be added to your portfolio that helps in fulfilling your life objectives by receiving a selected return at the time of investment. So, it is a smart decision to invest in ULIP plans.

Written By: PolicyBazaar - Updated: 08 September 2021

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