ULIPs: A revolutionary Phase of Indian Insurance Industry

ULIP plans brought a revolutionary phase in the Indian insurance industry. The revised ULIP plans have been like a boon for the consumers who are looking for insurance and assured return on their insurance investments. These insurance products along with assured tax returns are also linked with tax benefits. The assured return on insurance investments has made quite a good impression into the minds and hearts of the investors. However, if not properly guided by the agents, ULIPs become the most miss sold products in the Personal Finance domain.

In traditional insurance products pattern, insurance component takes an edge over the saving component; thereby, focusing entirely upon the coverage which is yet to be achieved in future. However, ULIPs give a complete 360 degree view of the insurance industry. In ULIPs, insurance cover is secondary focus, while the main focus remains on return part of your investment. ULIP offers opportunity for investor to select a product which matches their risk profile and mainly on their income sources and future needs. Depending upon the risk factor, income source and future needs with present debts of the investor he or she can select any ULIP product. Almost identical to mutual funds, ULIPs also function the same way with payment of premium and declaration of units in terms of NAV.  Just remember getting acquainted with your product is extremely important if you want to extract good returns from the markets. ULIPs are most evolved investment avenues, and thus making well informed decision is the key, if you want to invest in ULIPs.

The article provides some informative tips for your ULIP investments.

1) Get thoroughly aware of the terms and conditions, policy structure, payment modes, kind of funds available in market, your risk potential etc. clearly before investing in ULIPs. Print, Paper, TV, radio and social (internet) media are things which can help you sort half your job. For the rest, approach financial experts or experienced insurance agent.

2) Focus on your need and risk profile: Never push your limits in investments else you will have to face the brunt of markets and you fall flat on the face. Secondly, investment is not about taking a loan or borrowing from someone and fuelling for your investment needs. Ultimately, it doesnot make any sense. Choose a suitable plan which focuses on your need and limited risk. Risk Profile should be deciding factor in choosing a ULIP.

3) Comparing ULIPs: Various insurance companies offer ULIPs that vary on parameters like expenses, premium payouts and performance etc. ULIPs work on premium payments as opposed to sum assured in the case of traditional insurance products. Before investing in any ULIP, you should compare it with other ULIPs that are available in the market and evaluate them on the basis of performance of debt, equity and balanced schemes and performance of various portfolios. Expenses has to be monitored very carefully as they play a major role in ULIP. It is advisable to study the market carefully and do some research on the top-up facility offered by ULIPs i.e. additional lump sum investments which can be made to enhance the policy’s savings portion.

4) Experienced insurance advisor: Experience talks! Before doing any kind of major investments in ULIPs select a financial advisor who is having a thorough knowledge of insurance instruments. But make sure that the advisor who you are seeking is unbiased and independent. Never hire agent who is an official broker of some insurance company. You should also look for reviews of the financial advisor from his or her previous clients and check standards of services they provide.

ULIP is all about careful setting up of the stage for better market returns. The more you study the better are the returns that you can extract from the markets. Risk potential, your income source, kind of funds available, policy structure, terms and conditions, good insurance agents, not to push your limits are some of the things to watch out for. Finally choose unbiased Insurance agents who would be working for your welfare. Try and get friendly with insurance agent so that he or she provides more services, rather than just filling and submitting the required forms.