Understand Unit-Linked Insurance Plans (ULIPs)

What are ULIPs?

ULIPs stand for Unit-Linked Insurance Plans. It offers the dual benefits of insurance and investment. It gives the risk cover to the policyholder along with investment option to invest in a myriad of investment stocks like bonds, stocks or mutual funds. A small amount of premium goes towards securing the life of a policyholder, and the rest of the money is invested in investment options.

As a single and integrated plan, the best ULIP plan in India let you manage both the investment part and protection part as per the specific needs and choices.

 

 

 

 

Types of Funds Available in ULIPs

 

Type of Fund Nature of Investments Risk Involved
Equity Funds Investment is mainly made in company stocks with the aim of capital appreciation Medium to High
Income, Fixed Interest and Bond Funds Invest in government securities, corporate bonds and other fixed-income instruments Medium
Cash Funds Also known as Money Market Funds, money is invested in cash, bank deposits and money-market investments Low
Balanced Funds Blends equity investments with instruments offering fixed returns Medium

 

Who Should Invest in ULIPs?

1. Those who want to track their investments closely

ULIPs allow investors to track their investment portfolios closely. They also come with the switching feature, that is, an investor can switch funds from equity to debt and vice versa, as per the market volatility.

2. Those who want to invest for a long-term

ULIPs are an ideal investment avenue for those who want to accumulate money for their long-term goals, like child’s education, marriage, retirement, etc.

3. Those with different risk profiles

Across different funds offered, investors can invest their money in equity and debt as per their risk appetite.

Those who are ready to bear high market risks Equity
Those who want to invest in safe instruments Debt

 

One can invest in ULIPs as per their life stage. There are various fund options in ULIPs which one can opt for depending on their life stage and needs and financial liabilities at that point in time.

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