How to Choose the best ULIP plans in India?

Among the many popular financial instruments that are available to every Indian today, ULIP has been gaining a lot of traction, and for a good reason. It is a policy that provides you with many benefits, 2 major benefits being that of investment and insurance. ULIP is great policy, especially for those who are looking to invest in the long run. If you are keen on investing in ULIP and want to understand how you can select the best policy for yourself; listed below are some of the factors to help you understand in choosing the best ULIP plans.

What is a ULIP?

ULIP is a type of life insurance policy that provides the investor with the dual benefits of insurance and investment. These benefits are provided to you in a single policy without the requirement of having to take out another policy. The premium that you pay towards a ULIP is divided into two parts. One part is used in providing life insurance cover for your loved ones against various life risks. The other part of the premium is used for investment. The types of ULIP funds you get to invest in are equity funds and debt funds.

Investments in equity funds are made in stocks of market listed companies. This type of fund has a higher risk factor and provides higher returns to the investor. Investments in debt funds are made in government bonds, securities, corporate funds, and other types of cash markets. This fund has a low risk factor and provides low to medium returns to the investor. Based on your risk appetite and your life, you can choose to invest in a single fund or both the funds.

How to select a ULIP plan?

When you are considering investing in a ULIP policy and are confused about which policy can be the best for you; there are a few factors that you should consider before you decide. Listed below are some of the factors that can help you make a decision:

  1. Life goals

One of the major reasons for most people who invest in ULIP plans is the gain of good returns to accomplish their life goals. A life goal could be anything. Buying or building a dream home, securing your child’s future in terms of the education or marriage, or even wanting to retire early to start a business. For every individual, a life goal can be anything. Based on what your life goal is, you should select the policy that could help you in accomplishing that. Look for the type of funds that are available to invest into your policy. Investing in both the funds can help you maximise your returns and get a greater maturity benefit, which could help in accomplishing your life goal.

  1. Duration of the policy

Majority of the investors who invest in a ULIP go for a long-term policy. The main reason behind opting for a long-term policy is that the benefits that you get to enjoy with the ULIP policy cannot be accomplished in a short-term policy. The returns increase with time. Any impact that your investments or returns face due to different risks can be corrected only in a long-term policy. The short-term policy does not offer you the chance to regain the lost investment or returns. It is always advised to stay invested in a ULIP with a long-term policy to enjoy greater benefits and easily accomplish your life goals to enjoy a secured future.

  1. Required life cover

Life is full of unpredictable risks, and no one can tell when one might get struck by it. The other benefit of a ULIP is the life insurance cover that it provides. One part of your premium is used in providing the life insurance cover to your loved ones. However, if you are the sole earning member in your family, then you might be required to dedicate a higher amount towards the life insurance cover. If there happens to be a co-earner in your family; this could be your partner, your child, or your sibling, then you might reduce the amount that you invest towards life cover. A co-earner might help in covering any immediate expenses without the need of a higher life cover. Opt for higher life cover only if you, the insured, are the sole earning member of your family, and there are dependents who survive on your income.

These are just a few of the deciding factors that you can take into account when you are looking for the best ULIP plan for you and your loved ones. To get a better idea about which plans you can invest in, you can visit your preferred insurer’s website, where you can use the ULIP calculator.