Understanding how it works and its benefits.

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Policies which offer a dual benefit option can help you achieve multiple goals simultaneously. This option should ideally include a desired life cover and a way to fulfil financial requirements.

If you already know what is a ULIP, you might also be aware of its ability to help you fulfil multiple goals. Here’s more information on how it works and why you should opt for it.

How does it work?

Plans linked to units and offering insurance bring with them a wealth creation aspect. The money that goes in is divided into two parts. The first part works as the premium for your life insurance cover. The second part is invested in market funds.

While your fund manager will work towards making the optimal use of this amount, it usually remains flexible. You can also choose which specific direction you want this money to be diverted to.

Considering your present and future needs, you can also reallocate your funds. Insurance plans that are linked to units come with a lock-in period which differs from insurer to insurer. The standard lock-in period is five years.

Benefits of a Unit Linked Insurance Policy

  • Transparency:

When you purchase this plan, you are well aware of where the money allocated is being used, or what purpose it is being put to. You are also aware of the charges you will incur as you place your finances in different avenues. This helps you plan and allocate your finances better.

  • Flexibility:

When you buy a ULIP plan online, you get the flexibility of switching between funds. The decision of where and when to place your money lies with you. Depending on the market and your requirements and aspirations, you can switch between debt and equity funds.

  • Long-term financial support:

Even if the minimum term is five years, it is important to keep in mind the high value of life insurance cover offered by this plan. With all the benefits of ULIP to consider, it is safe to factor this plan into your long-term financial planning. Also, even when you exit after fulfilling the minimum term, it offers you significant returns as compared to other plans available in the market.

  • Life Cover:

When you opt for this plan, the growth of your finances is complemented by the existence of a life cover. The cover protects your family from uncertain events and ensures that your family is well taken care of in case of an unforeseen situation. You, therefore, have one less thing to worry about in your life. For the respective life cover, you can also use a ULIP calculator to determine how much you would be paying in the long run.

  • Risk Appetite:

These plans work well for you irrespective of whether you are a low-risk, high-risk, or moderate-risk player. You can choose from a range of options ranging from debt funds, equity funds, or a balance of both that best suits you.

Whether you are just starting on your financial journey or looking to include a versatile option that will help you achieve more, the best ULIP plans are what you should be considering.

 

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