While tulips are thoughtful and romantic, Unit-Linked Insurance plans or ULIPs as we call them, though not quite flowers, could be quite a thoughtful gift too. A ULIP is definitely more than buying a regular policy, or Term Insurance policy to secure your family’s future.
Now, here’s something you should know. As ULIPs are linked to equities or market funds, they are considered to be more susceptible to risks. But they also have a higher chance when it comes to beating inflation compared to other investment products such as real estate or Fixed Deposits.
7 Reasons For Investing in ULIPs
- Before one buys a ULIP, you are able to have complete access to the value of investment and expected IRR based on 6% and 10% rate of returns as well as charge structure for the complete duration/tenure of the policy before you even buy the product.In the same way other important information are also shared with you, such as the annual account statement, daily NAV reporting and quarterly investment portfolio. This helps you to stay aware of the status of your investment portfolio throughout. You can find the latest NAVs published on company websites on a daily basis.
- ULIPs allow you to make partial withdrawals which means that you can withdraw a certain amount after 5 years from your Unit-Linked account, retaining only the stipulated minimum amount.This could really come in handy, especially if you are in dire need of money caused by an unforeseen event in your life.
- These products also help you get into the habit of saving. The average unit costs are also lower when you compare it with a one-time investment product.
- When it comes to coverage, ULIPs are a perfect solution for risk cover, long-term investments with the benefit of various investment opportunities, along with tax benefits.
- Investors who are interested in market-linked growth without directly participating in the stock market, will find it most appealing.
- The most important benefit of a ULIP is the flexibility provided by this product. Most ULIPs offer a complete choice of high, medium and low risk investment options under the same policy.As an investor you are allowed to choose an appropriate policy based on your risk appetite. You also have the provision to switch between fund options without any additional charges for specified number of switches. Some insurance providers offer extra number of switches.
- These plans also provide the flexibility to choose the sum assured, as well as the investment ratio in the annual targeted premium, along with one-time increase in investment portfolio with the help of top-ups to be able to invest in opportunities offered by the external environment or even your own income at a given time.
Hence, if you do decide to gift your family a ULIP, you are gifting them not only a life cover that will sustain them in case of an unfortunate event, but you will also be saving to improve your family’s standard of living. You also gain a lot of knowledge about the stock market if you track the investments made by your fund managers, and this might help you hone your skills when it comes to stock market investing.