Things to Consider Before Buying ULIP

A unit linked insurance plan, or a ULIP as it is better known, is a unique life insurance product that combines insurance with investment. A part of the premium you pay is safely tucked away in a life fund. The other part is carefully invested in the financial markets and you earn returns from them. ULIPs are very handy and so you may consider getting a ULIP. There are however a few things to remember before you buy a unit linked insurance plan. Read on to know more.

Easy tips to buy ULIP

Here are some handy tips for you before you buy a ULIP for yourself:

  • Choose your fund depending on your risk appetite: There are many different types of funds you can choose for your ULIPs. Some funds, like the cash funds, are low in risk. Some funds like the equity funds have a higher risk exposure. So assess the amount of risk you are capable of taking and choose your ULIP fund accordingly.
  • Buy a ULIP for at least 10 years: A ULIP needs to be purchased for a minimum of five years. However, it is highly advisable for you to buy the ULIP for at least 10 years. You can get the highest returns only if you stay invested for 10 or more years. Many loyalty additions are also attached to the ULIPs after they complete 10 years.
  • Buy a ULIP when you are young: ULIPs start costing more as you age, as the mortality charges increase with age. So try to buy the ULIP early on in life and stay protected for a longer duration. If you are fifty years of age or above, strictly stay away from ULIPs.

These are some really handy tips that you can use when buying a unit linked insurance plan. So do keep them in mind at all times.

How to buy the correct ULIP plan

Like all other forms of insurance and investment tools, ULIPs too demand your attention and caution when you go to buy them. In order to find the correct ULIP for yourself, you must:

  • Don’t go against your risk profile: Like mentioned above, different ULIPs expose you to different amounts of risk. Go as per your intuition and don’t invest in a high risk fund unless you are very sure of getting the returns you aim for.
  • Know your goals: Be very sure of the reasons why you want to buy the ULIP. If you aim to buy a house with it, or you wish to secure an education corpus for your kids, every investment has a goal. If you know what your financial milestone is, you will be able to invest in the correct ULIP.
  • Use it as a retirement cover: Since ULIPs are long-term plans, you can plan your retirement with a unit linked insurance plan. If retirement corpus is your aim, choose a plan very carefully.
  • Check the death benefit: Never forget that a ULIP is an insurance product in the first place. So keep a very close eye on the death benefit when buying your ULIP. The correct unit linked insurance plan will offer an appropriate death cover and prove to be highly beneficial for you.
  • Comparison: You must compare the different ULIPs to ensure you find the absolute best ULIP. It is very easy to compare ULIPs online and the process barely takes a few minutes. There are many good online insurance aggregator portals like Coverfox.com where this can be done free of cost. So compare the ULIPs properly and choose your ideal cover in a methodical and precise manner.  

Follow these guidelines and you will have the best ULIP in your hands in the shortest possible time.

The bottom line

You can make many beneficial profits if you choose to invest in a good and well-performing ULIP. Thankfully, there are plenty of ULIPs to choose from. Most of the leading life insurance companies of India, both public sector as well as private, offer ULIPs at great rates. You must compare all the available plans and then find your ideal unit linked insurance plan. So if you are looking for a new insurance cum investment opportunity, do explore the fascinating world of ULIPs. There are many interest and fruitful policies to choose from. Go online, do some research, compare and find your ideal cover. You will then successfully have a good life cover and will also be able to make your wealth grow.