How to Choose a ULIP Plan in 7 Easy Steps?

Every person has some financial goals like buying a dream home, funding children’s higher education, their marriages etc. It is not enough to save money to reach these goals. A proper financial strategy should be put in place. There are many plans in which a ULIP plan is the best. It helps you to secure your family and reach your goals financially.

ULIP plans are the most popular products of life insurance. They not only provide financial security but also offer a sound investment option. The policyholder gets a chance to invest in various qualified funds, bonds or stocks.

One can manage the investment components according to their specific choice’s insurance need and risk appetite. All the plans are subjected to capital market risks, and one should thoroughly check the documents before investing.

Internet is helping policyholders in getting the product details. However, it is always suggested to check out different features, terms and conditions online to align the policy with one’s risk appetite.

How Can You Choose The Right ULIP?

Best ULIP plans come with the fundamental aim of selecting good investment products. These plans also offer a wide range of opportunities for an investor. Like general Life Insurance, one need to pay premiums according to the policy schedules.

A percentage of the premium gets invested in the insurance component, whereas the rest gets invested to generate returns. Thus, the policyholder also gets a chance of earning from the financial progress of market-related Investments.

  • Capacity In Handling Risk

The most critical component for any ULIP is the capacity in accepting the risk. The golden rule here is that one should always land at a bigger risk in the early stages of their life. However, risk capacity continuously decreases in later stages of life, especially when one starts a family and have dependents.

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Moreover, certain other factors may curtail one’s risk-taking capability. Therefore, the investor must also check whether the policy comes with a free switching option. The switching feature helps an investor cope with the market’s unpredictability by giving the freedom to switch depending on the market conditions.

One must always check for the funds backed by song performance and on a proper track, which help reach the life goals.

  • Person’s Investment Goals

Every person has financial goals, and wise investments can help them to fulfil their goals successfully. The goal can be anything like purchasing a dream house, children’s higher education etc.

All these goals require a stable financial plan. So, it is crucial to identify goals before choosing an appropriate strategy. It also can help the investors to calculate the period needed in achieving the same. With this, investors can make a strategic plan and decide the investment amount.

Points To Remember While Purchasing The Best ULIP Plans

Now that you know the ULIP meaning, you must keep in mind that ULIPs, like any other insurance, needs caution and attention while purchasing them. For finding the best ULIP plan, the investor should adhere to the points given here.

  1. Risk Analyzing

Various best ULIP plans come with different kinds of risks. Hence it becomes crucial to analyze one risk-taking capability. One should not invest in high-risk funds unless they are sure of getting the aimed returns.

  • Life Cover

ULIP plan is a product of life insurance that offers coverage. Select the appropriate plan with the right cover and good benefits.

  • Investment Goals
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Reasons to buy a plan must be clear. It gives a thorough understanding of all financial milestones one should cover by investing in the right plan.

  • Long Term Investment

ULIPs are always considered as long-term Investment plans. This is because they help to provide sufficient funds for retirement and other goals.

  • Comparing

Different kinds of ULIPs are available in the market. Therefore, one must thoroughly compare these plans before proceeding with the purchase. Comparison helps to select a plan which fits one’s needs and budget.

  • Choosing The Right Life Cover

ULIP plan is a product of life insurance and provides a life cover. One must adequately choose a cover that can financially support the family. The ideal cover should be 15 to 20 times the annual income. ULIPs allow a minimum cover.

  • Invest In ULIP Plans For Long Term

The purpose of a ULIP is to fulfil the long-term goals of an investor, such as buying a house, new business or a dream vacation etc. However, these plans come with a lock-in period of 5 years, whereas other investments have a lock-in period of 7 to 15 years.

Income Tax Exemptions

ULIP plan also offers the investors the advantage of tax exemptions. This type of exemption come under the Income Tax Act 1961.

ULIP plans offer a wise choice for the investor. Hence one can select these plans after carefully analyzing all the factors. Moreover, most of the plans also provide free switching opportunities.

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