Advantages of investing in unit linked insurance policies

Posted by Aravi on May 30th, 2017

ULIP or unit linked insurance plan is a type of insurance which provides dual benefit. Unit linked insurance plans provide insurance cover and option to invest in the market instruments such as stocks, bonds or mutual funds. A unit linked insurance plans act like a savings instrument, but also has the benefits insurance policy. When a policy holder buys an ULIP, he or she is getting insurance policy and is also going to earn through the market linked investments. Unit linked insurance plans are linked to the capital market and further it also offers flexibility whether the person has to invest in equity or debt funds which solely depends on the risk appetite of the person. These dual benefits of investment and insurance make the ulips a better and flexible investment option.

Who can invest in ulip plans?

Unit linked insurance plans allow you to closely look after your investment portfolio. Also the ulip plans are highly flexible they offer you the flexibility to switch the funds if the investment is not working well. A few initial switching of funds is free later on it is charged. Ulip plans are for the individuals who are ready to invest for a medium term or long term period.  The ulips are ideal for all the buyers depending on their needs and the goals. You need to check your financial liabilities and needs depending at the life stage you are on.

What are the advantages of the unit linked insurance plans?

Unit linked insurance plans allow you to earn through the investments that are made in the market. As a part of the premium paid goes for insurance and part of it is invested in the market.  The instruments in which they are invested can be debt or equity in varying proportions.

The unit linked insurance plan offer dual benefits of life insurance and savings with market linked investment returns. Hence, you get an opportunity to invest money in order to earn higher returns while taking care of your protection needs. Investing in unit linked insurance plans help you to inculcate a religious habit of investing and saving which will help in building a large corpus over the years.

Also the unit linked insurance plans are highly flexible. There is an option to switch between the investments funds to match your changing needs. You also get the facility to make partial withdrawals from time to time which is subject to charges and condition. You can also make partial withdrawals of your funds after a certain period.   The ulip holder should keep his or her focus on investment goals and identify a plan which best suits your need as well as risk. If you have high risk appetite and good financial health go for plan that offers high risk. Carefully make observation of how the investment in the fund has performed in the last 2-3 years. Also know the charges levied on entry and exit of the policy. Compare the ULIP products offered by various insurance companies in terms of premium, performance, facilities provided and structure.