ULIP is an acronym for Unit Linked Insurance Policy. ULIP can be used as both insurance and investment. The policyholder pays a premium which is split into two parts. One goes to life insurance, the other to mutual funds for investment. An ULIP holder can choose to invest in equity or debt.
A policy holder who is aggressive will prefer to invest in equity, while a policy holder who is conservative might choose to put his money into debt. The policy’s term may be between 5 and 15 years.
ULIPs offer a great investment opportunity. These ULIPs offer a comprehensive package of tax-free risk coverage with return potential. These are insurance that never stops giving. In recent years, banks have begun to take advantage of the fact more people want to invest in ULIPs.
These policies were subject to heavy charges, sometimes up to 80% of their premium. In 2010, the Insurance Regulatory and Development Authority (IRDA), put an end to this practice and capped annual fees for ULIPs at 2.25% after 10 years.
These policies are attractive because they can be modified to suit your needs. ULIPs offer high flexibility. A policyholder can easily switch between investment options according to market conditions. The bank allows a limited number of switches to their investors. This feature is very important for these types of policies because no other investment policies permit investors to make such switches.
You can tailor unit linked insurance plans to suit your financial goals, financial status, and other needs. You can modify or choose the right plan depending on your life stage and main focus. A person who is just starting to work and not married will have different needs from someone who has three children.
Your ULIP benefits can be chosen based on your needs and those of your family. ULIPs are the best way to both insure your family’s life and invest your money.