ULIP plan is a product offered by life insurance companies, which provides investors risk cover for the policyholder and investment options to invest in any qualified number of investments such as bonds, stocks or mutual funds. It is a single integrated plan in which the protection part and the investment part can be achieved according to specific choices and needs. The investments made in ULIP plans in India are risks associated with capital market. Investment choice should be made carefully after considering the risks, as the risks are borne by the policyholder. Another important thing that needs to be considered is the need for funds in the future. The ULIP plans can be used for variety of insurance products such as health, retirement planning, child’s education, marriage or other investment purposes. Advantages of ULIP plans are market linked returns, life protection, investment, savings, and flexibility.
Which investor class does a ULIP plan suit the most?
* Individuals with a long and medium term investment horizon
ULIP plans are perfect for individuals who want to stay invested for relatively longer period of time.
* Individuals who wish to closely track their investments
ULIP plans permit policy holders to monitor their portfolios closely. They also have the flexibility to switch their capital amid funds allocation with variable risk return profiles.
* Individuals with variable risk profiles
There are around six funds offered to individuals and the equity component differs from zero to a maximum of 100 percent. Thus the investors have a choice of funds available – from investors who have a strong risk appetite to the ones who are low to moderate risk- takers.
* Individuals who are investors across all life stages
The ULIP plan category, offers a range of plans, which can be opted for depending on your financial liabilities and the life stage you are in at that point of time.