Basic Things To Know About ULIP Before Purchasing It
Table of Contents
We all know how important is to save money and therefore select and invest in different types of investment instruments such as insurance, FDs and RDs, gold, property and ULIPs. If you are planning to invest in ULIPs, then you should understand some basic things about it to make your purchase more effective.
What Is ULIP?
The ULIP is a tool where your money is put in the equity market. This instrument serves you with insurance as well as investment options to provide you with opportunities to create wealth along with security. The cost of premium paid by policyholders is segregated into two parts where one part goes into insurance to offer you the life cover and the other part is invested in stocks or bonds. However, the return on investments in stocks etc., are based on the performance of the selected fund. The ULIP plans are generally recommended majorly for their flexibility and transparency.
Life Cover Feature
When it comes to ULIP, it is considered a blend of insurance and investment tool. Therefore, it becomes crucial for you to ask your agent about the life cover provided under the ULIP policy that you are looking forward to purchasing. You may have to choose from a fixed life cover or different types of policy coverage under a ULIP policy that would help you align the policy with your financial goals.
Different Charges to Pay
It is always good to know everything clearly that you are planning to do in your future. You should hold adequate knowledge about the cost that you will have to pay to avail of the service. Most of the charges to be paid may comprise mortality charges, switching rates, fund management costs, policy administration amount and surrender fees. It is also suggested to find the right and accurate information pertaining to the frequency of these charges.
Investment Options Available
The investment made to ULIP plans is directed to debts, hybrid funds, and the equity market based on your coverage selection. This gives you the investment freedom to put your money in a specific type of fund or in the combination of several funds. However, before opting for an investment options one should examine his or her needs, expectations and potential to handle risk. To make the right choice you must hold sufficient knowledge about the fund ranging from its past to its future.
Conclusion
You should possess a basic understanding of the ULIP plan before investing in it. To ensure making an informed decision, you should have knowledge about a variety of options related to ULIP policies. While planning to invest in ULIPs, you should get information related to partial withdrawals options, surrender value, switching fund choice, additional investment, and so on. When your decision will be based on the understanding of policy and a thorough research process, there will be lesser chances that you will go wrong.
You May Also Like To Read:
Difference between ULIPs and Life Insurance
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
