How To Choose The Best ULIP Plan?

Buying a ULIP is enough to start your insurance cum investment journey. Taking the first step towards insurance is very critical in its own. Lack of basic knowledge on ULIP plans is one of the common mistakes an investor makes which will eventually lead to investment blunder with almost no returns. Choosing an investment option and researching it and even customizing it as per your needs timely in the light of your future financial needs is the first step of choosing a product. Money is a person’s most hard-earned assets and it needs to be treated that ways. Growth in the value of money makes a massive difference in a person’s life. It is also necessary that a person does not compromise with his product.

 

The best ULIPs are the ones which are cheaper and give huge returns with the most appropriate coverage with investment returns. The ULIP plans also provide transparency on its value and returns.  ULIP Plans give the best life coverage to the policyholders with reasonably priced premium payment. Therefore, this gives twin benefits of any investment plan by providing the added leverage for investments since, the policyholders have the option to switch funds based on the current market scenario.

 

 

Why should one choose a Unit Linked Plan?

 

•           Adjust your Investment: Your ULIP Plan gives you the flexibility to manage your funds from debt to equity or equity to debt. You can make a switch in your premiums without any changes in your financial coverage.
  
•       Withdraw partially: The policyholders of ULIPs are allowed to partly withdraw their funds before the plan maturity from his collected premium amount.
  
•          Switch funds as per current market scenario: Make your investments in the ULIP Plans that gives you various fund management options so that you can opt to invest your money into the funds of your choice.
  
•          You can choose funds to invest your premiums.
  
•         You can choose your plans of either investor or equitable approach.
  

 

 

ULIP plans - Benefits:

 

•          Clear information about pricing structure, returns and benefits
  
•          Flexibility to switch funds
  
•          Life Insurance
  
•          Different premium payment option
  
•           Rider benefits option
  
•          Tax benefits Under Section 80C, 80D & 10 (10D)
  

How ULIP plans are priced?

 

The ULIPs carry certain costs which are included in their structure, that are further divided into various categories described below:

 

·         Policy Administrative Cost: The administrative costs in ULIP plans are subject to deductions timely for the revival charges of insurance plan maintenance.

·         Surrender Cost: The surrender costs in your ULIP policy are applicable on complete or partial withdrawal of accumulated premiums as per the policy records. These costs are applied as the percentage of premium of the fund value.

·         Premium Allocation Cost: Such premium allocation costs in ULIP plan are applied by the insurance holder on the medical expenses or the underwriting expenses incurred by the company.

·         Cost of Discontinuation: In a case of the discontinuation of the ULIP before its maturity and the lock-in period then a minimal discontinuation charge is deducted. Charges are these are under IRDA regulations hence are applicable to all policies.

·         Mortality Cost: The cost related to the ULIP plan like the mortality costs are incurred to give coverage to the insurance holder that varies with the assured sum and the age of the unit policy which are deducted monthly.

·         Switching of Funds Cost: A ulip policy allows you to make you’re the investments of your money into various fund choices which additionally gives the choice of equity to debt or debt to equity funds where the insurance provider charges a minimal for the switches. Generally, the companies allow certain initial switches for free every year.

·         Fund Management Cost: The ULIP plan aggregated sum funds get invested into the equity or the debt tools of which the policyholder bears the cost of the fund management varying accordingly to the plan and the amount after calculating the deductions as per the NAV (Net Asset Value).

 

 

It is good to learn from your mistakes, but why make them on the first case when you can research on your product. ULIP plan are structured in a way to make the best out of your money to give you best return at an affordable cost. The prices added in the ULIP plans are competitive to similar product in the market at an average. Hence, this cost structure makes the unit linked plan very affordable to own.