You may have heard mixed reviews about Unit-Linked Insurance Plans (ULIPs) over the past few years. Several financial experts in India have been praising as well as criticising ULIPs. You may not know who or what to believe when it comes to ULIPs. As a product that offers both insurance protection as well as investment returns, a unit-linked insurance plan serves as a great tool to get security and to manage your finances.
Whenever you plan to invest your money, you may naturally think of investing it in conventional instruments such as fixed deposits or gold. However, you might want to check out more modern financial tools like ULIPs that offer higher returns and also offer insurance coverage.
A ULIP is a great financial instrument when compared to endowment life plans or traditional life insurance plans. When you pay a premium for your unit-linked insurance plan, a part of the premium is utilised for your security, while the other part is used for investing in certain funds, wherein it helps in developing your wealth. The investment portion of your premium will be put in certain units, which you can select as per your preferences, requirements, and financial management plans.
A traditional term insurance plan tends to be very obscure as you would have no clear idea about where your funds will be allocated. You may also not have proper knowledge regarding the returns that you receive or the distribution of your premium amount. On the other hand, when you have a ULIP in your name, you will be able to enjoy full clarity. In your ULIP policy document, you will find all the details about your policy such as policy administration charges, policy allocation charges, policy redemption charges, policy switching charges, policy returns, and many more.
Many people tend to get confused if they should invest in ULIPs or mutual funds. The main difference between them which proves that ULIPs are a better choice for investment is that mutual funds do not offer an insurance cover. Moreover, all mutual funds do not give you tax deductions, whereas all ULIPs provide tax benefits.
Why ULIPs Started to Get Unpopular?
ULIPs were extremely successful for a long period in the Indian market since the 1970s itself. However, slowly, many private life insurers started to launch certain ULIPs that unnecessarily paid enormous commissions that ranged from 60 to 100% of the premiums paid for the first year. This introduction of massive commissions led to wrong ways of selling ULIPs and it even led to financial scams. Soon, ULIPs lost their popularity due to the scams associated with them.
Advent of the New-Generation ULIPs
Over the past few years, you must have come across terms such as 'new-gen ULIPs', 'next-generation ULIPs', etc. That's right! In order to revive the benefits of ULIPs, the Insurance Regulatory and Development Authority (IRDA) introduced brand new measures. The quality of ULIPs was brought back again and they started to cater to the needs of investors who were looking specifically for long-term growth.
How Can You Enjoy the Benefits of a New-Generation ULIP?
With digital finance at its best, you can compare various life insurance options online including ULIPs and even apply for one online. There are multiple public and private insurers that have great ULIP products. As an enthusiastic financial investor, you can compare these options and pick one as per your preference.
The new-generation ULIPs offer greater returns (15 to 20%), good liquidity options, amazing sum assured, and convenient policy switching facilities too! You can also renew your ULIP online without having to visit a branch and wait in a long line. Most ULIPs come with a lock-in period of 5 years. So, for a long period of 5 years, your hard-earned money will remain safe and will grow continuously. After your policy completes 5 years, you have the option to surrender it according to your convenience.
You may also check out some awesome features that come with the new-age ULIPs such as systematic monthly plans (SMPs), systematic withdrawal plans (SWPs), and systematic transfer plans (STPs). These features will assist you in boosting your wealth and in planning your funds for retirement.
A ULIP is a wonderful long-term investment that also offers reliable protection to you and your loved ones. It is also flexible and gives you an opportunity to satisfy your risk appetite in a safe way!