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Comparison of online ULIPs Help in Making a Suitable Choice
A ULIP or unit linked insurance plan is a market linked product that combines the best
features of insurance and investment. The plan is actually linked to the capital market and provides flexibility to invest in
equity or debt funds as per the customer’s risk appetite. The two advantages along with flexibilities make it an attractive
investment avenue. Many insurance companies have reduced commissions and other charges. As a result, some of the united link
insurance plans launched in recent years are cheaper than mutual funds. ULIP is a complex financial product. There are a lot
of variants, each with its own set of features and benefits. Buying the product can be a mind-boggling process. However, with
some important steps in mind, it can be a hassle free process.
The buyer should have knowledge about the working of the ULIP. Customers should read as much as possible before investing.
The charges levied on entry and exit of the policy should be very clear. Focus of the customer should be on investment rather than a particular
feature of a ULIP. Buyers need to identify a plan that suits their risk appetite and financial health. High risk appetite should be followed by a more aggressive
fund option. The performance of the fund should be analyzed for the last 2-3 years on benchmarks indices like BSE, NIFTY. ULIP products of different
companies should be compared on parameters like scheme performance, premium payments, cost structure and additional facilities.
The three investment options are in constant confrontation with each other. ULIPs, Traditional Plans and Mutual Funds are the
three investment options. The answer for the best investment option depends on 3 factors: investment goals, risk appetite and financial health. In ULIPs,
the money is invested in equity, debt and hybrid funds which can be chosen as per risk capacity. In traditional plans, the money is invested only in debt
instruments. While in Mutual Funds, the money is invested in debt, equities and other money market instruments. Loyalty benefits are given on long term
investment of ULIPs. In case of mutual funds, no loyalty or long term benefit is given. Some traditional plans offer loyalty benefits to policyholders
for continuing the policy for the full tenure. With a ULIP, one can withdraw money but only after the lock-in period is over. Traditional plans lock in
the funds. The individual cannot withdraw money before maturity. In case of mutual funds, there is no lock-in period. Cashing the funds is very easy.
The features and benefits offered by ULIPs are incredible. Hence, it is a great investment tool especially in today’s fast
paced world where return is as important as security. Some of the benefits of ULIPs have been listed below:
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Transparency : Transparency is one of the key features of ULIPs. They offer a great degree of flexibility to customers and hence customers can control their ULIPs to a good extent. Clear benefits and features, appealing brochures and free-look period make sure that customers are satisfied before taking the plunge.
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Liquidity : The scheme provides liquidity to customers depending upon the insurance provider from which it has been availed. Generally, insurance companies offer a lock-in period of 3-5 years after which customers are free to make either partial or full withdrawal.
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Tax Benefits : ULIPs offer not only protection and returns but also tax exemption under section 80C of the Income Tax Act. ULIPs are a great way to save in a disciplined way and to also ensure growth of the saved amount.
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