#besttermplam

How to Get Better Returns on ULIP

blog img
 

A summary of Unit Linked Insurance Policies:

Unit Linked Insurance Policies or ULIP is an insurance policy that offers you the perspective of wealth creation by providing the security of life insurance. In this plan, the policyholder should pay the premium either monthly or annually.

A small quantity of the premium will go to secure life insurance, and the rest of the premium is invested in a mutual fund. The policyholder will invest his or her money for 5, 10, or even 15 years, and they will accumulate the units.

Unit Linked Insurance Policies offers investors two options, namely, equity, debt, and balanced funds. In an equity fund, you will invest in buying shares of companies; while in debt, you will invest in debt instruments and balanced funds, you will invest equal shares in both equity and debt.

An aggressive investor will select an equity-oriented fund option, and on the other hand, the conservative investor will pick the debt fund option. The returns from the investment will depend upon the concert of the fund chosen by you.

 

A summary of Unit Linked Insurance Policies:

Unit Linked Insurance Policies or ULIP is an insurance policy that offers you the perspective of wealth creation by providing the security of life insurance. In this plan, the policyholder should pay the premium either monthly or annually.

A small quantity of the premium will go to secure life insurance, and the rest of the premium is invested in a mutual fund. The policyholder will invest his or her money for 5, 10, or even 15 years, and they will accumulate the units.

Unit Linked Insurance Policies offers investors two options, namely, equity, debt, and balanced funds. In an equity fund, you will invest in buying shares of companies; while in debt, you will invest in debt instruments and balanced funds, you will invest equal shares in both equity and debt.

An aggressive investor will select an equity-oriented fund option, and on the other hand, the conservative investor will pick the debt fund option. The returns from the investment will depend upon the concert of the fund chosen by you.

 

Benefits of investing in Unit Linked Insurance Policies:

By investing in Unit Linked Insurance Policies, you can gain many incredible benefits for your future life. Some of the benefits are listed below.

  • The investors have the freedom to choose their life cover, and they can choose the life cover amount that they want. All ULIP has minimum life cover, which overs ten times the annual premium amount. Depending on the insurance bank and policy, you can pick your life cover that has 40 times the annual premium or even higher.
  • Unit Linked Insurance Policies have two types of funds, and you have the freedom to pick your investment option based on your risk appetite and investment goals. The investors are provided with the option switch to move the amount between debt and equity funds.
  • This policy provides you with a beneficial option called partial withdrawal. This allows you to withdraw a part of the amount which was invested in your policy, and it is free of cost.
  • This is meant as goal-based planning because it will help you to secure your main goals in life, such as probability for wealth growth, saving for a child's education, and retirement planning.
  • By investing in this policy, you can save your tax under the Income Tax Act of 1961. At different stages of life insurance, you can gain a tax deduction while filing for your returns.
 

Magnificent tips to reap better returns in Unit Linked Insurance Policies:

When you invest smartly, you can reap better returns from Unit Linked Insurance Policies (ULIP) . While investing in other insurance policies, they will offer you 4% to 6% returns. Still, in the case of Unit Linked Insurance Policies, they provide you double-digit returns when you invest your money in equity funds.

This policy makes a better investment with good returns on your invested amount without too much risk on the market, and you can also avail tax deduction. The maximizing of the returns of your investments depends upon a lot of factors that you have to consider. You should monitor the market investment to get better returns.

There are some of the best plans provided by top life insurance companies that will help you to invest in the best investment funds. Here are some of the fabulous tips to get better returns from Unit Linked Insurance Policies.

  • Make use of the switching option
  • Relish the benefit from Power of Compounding
  • Selecting between debt and equity funds
  • Invest in equity funds and avail tax benefit
  • Investing with long term goals
  • Understand the overall economic scenarios
  • Invest in a disciplined approach
  • Life stage needs
 

Make use of switching options:

For producing better returns, you can use the switching and premium redirection ability which was offered by ULIP to gain a fuller advantage. The investors can move his or her cash into debt funds when the markets are rising and inequities when the markets are downcast.

When you apply this strategy for 2 to 3 times in your investment of 20 years; it will help in attaining your goals.

 

Relish the benefit from the power of compounding:

The Unit Linked Investment Plan has a lock period of about five years; so it is a better long term investment plan. If you invested for ten or fifteen years, you could gain profit from the power of compounding, that is the money you have invested has been reinvested for growth after a year.

In case your investment was linked with the financial goal, then it is advisable to invest for at least 10 to 15 years. This plan had generated a return of 12% to 15% in the long term.

 

Selecting between equity and debt funds:

Debt and equity funds have different characteristics. In debt funds, there was lower risk, and the returns are lower and stable. While in equity funds, there were high returns and also a high risk.

Unit Linked Investment Plan in debt funds will reduce the risk quotient. They also provide balance funds to create balance on both. But ULIP has 40% of equity exposure, and this makes them comparatively safer options.

 

Invest in equity funds and avail tax benefits:

Investing your valuable money in this plan provides you with a benefit to an avail tax deduction, and your money was tax-free from investment to making withdrawals. Unit Linked Equity plan also provides diverse funds options for investors, namely equity funds, debt funds, and balanced funds.

Further, you can gain a tax deduction when you file for your returns. Equity funds investment through this plan remains the best option to generate wealth for your future.

 

Making investments with long term goal:

The motivation to start investing primarily begins with wealth creation and to save money for future needs, namely, the child's higher education, children's marriage, building a new house, retirement, etc.

If you are investing in building a corpus, then you can switch from equity to debts when you build enough amounts and when closer to the withdrawal.

 

Understand the overall economic scenarios:

The investor should perceive various asset classes in different economic scenarios, and this could also impact one's switching decision. If the equity markets look pointedly overrated and luxurious, then the investors should switch to equity funds, and they should only switch back when equity markets become normal.

Many insurance plans provide auto-trigger choices that will favour investors by allowing for automatic switching, depending on the performance of the underlying properties in the fund.

 

Invest in a disciplined approach:

The ULIP has a lock period of about five years, and this automatically stimulates the habit of saving in the investor's minds and further helps the investor to generate compounding returns on the long term investments.

Some of the loyal insurance companies offer benefits such as paying back all charges that were brought while in the activation. These charges may include fund management charges, mortality charges, administration charges, and surrender charges.

 

Life stage needs:

The risk appetite of the investor will depend upon in which stage of the life cycle the investor is in, and he or she needs to balance this with his returns available.

Investors tend to obtain more risk factors as their financial responsibilities increase, and as they get older. They should automatically switch from risky equity funds to less risky debt funds as they get older.

By following the remarkable tips which were provided above the investors and policyholders can reap the better returns from Unit Linked Insurance Plans or ULIP.

Disclaimer:

*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time

The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.

Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.

Why is PAN number required? I have lost my PAN Card? My PAN card is not yet issued.

Correct PAN number is a mandatory requirement for all online applications.

Accurate mobile number is necessary for all our future communications. This includes pre and post login communication.

Suggested Plans

Bharti AXA Life Shining Stars

  • Non-linked, non-participating limited pay endowment Life Insurance plan
  • Designed to take care of the financial needs of your child.
  • Flexibility to opt between 2 Maturity Payout Options
  • Flexibility in Policy Term/Premium Payment Terms
  • A great short-term investment option for a child insurance policy.

Bharti AXA Life Flexi Term Plan

  • Covers Critical illness at the age of 75.
  • Option to select between Comprehensive cover or Major illness cover
  • Flexible benefit payout option. Payout options based on your financial requirements– a) Lump sum or b) Increasing Monthly Income or c) Lump sum plus Increasing Monthly Income.
  • Tax benefits on the Premiums paid and payout benefits received.

Bharti AXA Life Premier Protect Plan

  • Flexibility in Policy Term
  • Flexibility in Premium Payment Terms ( Single , Limited, and RegularPay Options)
  • Multiple Death Benefit Payout Option
  • Increase the Sum Assured on important milestones
  • Tax benefits