There is a saying: make your money work for you. The meaning of this saying is that you should be able to control your finances a manner wherein you are also able to grow it substantially over a period of time. But how do you make your wealth grow? One of the most common ways that people usually grow their wealth is by investing in the stock market. Investing stocks, however, carries a huge risk factor with it. One needs to have enough capital to be able to recover from any losses that could be incurred.
While the stock market is a great place to grow your wealth, there is also one way you can grow your wealth and get financial protection from the uncertainties of life. This can be done by investing in a ULIP. But what is ULIP? And what are its benefits? Read on to find out more.
What does a ULIP mean?
When you are looking to invest in a good life insurance policy, you must have come a ULIP many times and must have wondered: what is ULIP policy? ULIP, short for unit linked insurance plan, is a type of life insurance policy which allows you to grow your wealth with the added benefit of a life cover. A part of the premium paid towards the policy is used to invest in different types of funds which can be selected by you. The returns that are gained on the investments are added to the sum assured of the policy.
What are the benefits of a ULIP policy?
If you are having doubts about whether or not you should invest in a ULIP, here are some benefits of the policy:
- Choice of investment
When you opt to invest in a ULIP, you are presented with different types of funds to select from for your investment. If you want higher returns quickly, you can choose to invest in equity funds. However, these funds carry a high-risk factor, as market fluctuations can affect the returns you would gain on your investment. On the other hand, you have the option of investing in debt funds. In this fund, the money is invested in securities with fixed income, which, when compared to stocks, are less affected by market fluctuations and give steady returns. You also have the option of going with a bit of both, so that you can maximise the returns.
- Life cover for loved ones
While financial gain is the main selling point of a ULIP, the policy also offers life cover to the policyholder and their family. The life cover begins from day one itself. If the policyholder were to pass away due to some unfortunate circumstances, the kin of the policyholder will be given either the sum assured or the fund value, whichever is higher at the time of demise of the policyholder. This life cover can be used to take care of vital expenses by the kin.
- Financial support for life goals
For every individual, a life goal can range from starting their own business to buying a bigger house for their family. Based on the life goals, you, as a policyholder, can invest the amount that you feel will help in achieving your life goal. To get a basic idea about how much you should invest in the ULIP policy, you can use the ULIP calculator on the website of your preferred insurer. When you start investing early, the maturity benefits of the plan will be greater. At any point of time, you have the option of increasing the amount you wish to invest with the help of a top-up premium. You can also choose to decrease the amount you are investing in the policy.
- Flexible term options
When you are planning on investing in a ULIP, one of the first questions that will come to your mind will be: what is ULIP policy term options? For how long one wants to invest in ULIP policy depends on the individual. If you want to invest for 5 years, you have the option of a taking 5-year long ULIP policy. Similarly, you can invest for 10 or 15 years as well, depending on your life goals and how much you are willing to invest.
Do look out for these features when you are going through different ULIP policies. You can now easily buy a ULIP plan online as well. Compare different plans being offered and purchase the one that suits your needs.