What is ULIP and why should you invest in it?

• The unit linked insurance policies refer to insurance products which are a combination of insurance and investment policies. It is a financial instrument which provides life insurance cover as well as offer earnings through various market-linked funds. Due to this dual benefit feature it has become a popular financial product. ULIP is a long term investment product and requires commitment and discipline. Thus any individual who is ready for a long term investment with five year lock-in period should go for ULIP.

• ULIP allows the policyholder to invest in market through various investment tools like equity, debt, mutual funds or a mix of these.

• Insurance companies invest portion of the premium paid in ULIP in the market and the remaining half is kept aside for providing a life insurance cover. The market invested amount is managed by the fund managers of the insurance company, however, the investment options are chosen by the policyholder.

• However choosing the ideal ULIP are based on various factors like:• • Investment goals: You should always select a ULIP keeping in focus

your purpose and ultimate goal of investing like child’s education, child’s marriage, retirement planning, wealth generation, creating a financial back-up, etc.

• • Ascertain future obligations: Before selecting a policy ascertain if there are any future obligations required to be fulfilled like paying off any debt, borrowings,, rents or any future monetary requirements.

• • Age and risk appetite: Age is one of the most important factors when selecting a particular plan. An individual who is within the age group of 25 years can take higher risk and invest accordingly where as a person belonging to the age group of 25-40 years is likely to invest in an option which is less risky and provides good life cover and returns.

• Investing in ULIP provides the following benefits: • The policyholder gets the flexibility to invest in multiple tools after calculating the risks and best returns. • The policyholder has an advantage to switch between their investments tools, which allows them to maximize their gains as per market conditions. • • ULIP is a tax saving financial product as it provides tax deductions

and tax-free withdrawals. • • ULIP allows the policyholder to invest excess cash by making periodic

top-ups to the premiums.

•• It maintains transparency as the policyholder knows the exact

charges and performance of his/her account. • ULIP insurance be a good investment option which not only

provides a life cover but also good returns on your investment. It is apt for your long term goals.

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