Along with investment, the facility of insurance cover is available only through ULIPs. But many things are said about the returns and life cover from ULIPs which is not completely true.
In such a situation, it is important to understand it before investing in ULIP so that it can be taken advantage of according to your goal. Also Read: SBI Bank Rules: Cash Deposit Machine Rules If account not credited then complaint with this process
Unit Linked Insurance Plan i.e. ULIP is a life insurance product, in which customers get insurance as well as investment option. The money invested in ULIPs by the customers is invested in stocks, bonds and similar assets. However, a part of it is meant to provide life cover to the person insured. There are many types of questions in people’s mind regarding investing in ULIPs. Sometimes some people invest in it without thinking and then later they start getting worried.
This problem occurs due to lack of understanding about ULIPs. Before investing in ULIPs, one should keep in mind the pros and cons as well as the risks associated with it. Only the right understanding will help you take full advantage of ULIPs. In view of this, today we are telling you 5 important things about it. This will help you to understand about ULIPs and take investment decisions in it.
Effect of ULIP on your pocket
The first thing to be said about ULIPs is that they are not pocket friendly. It has to be understood that ULIPs used to be expensive during 2008. But now the time has changed. ULIPs have now become affordable and people also get the facility of life cover. Due to the products related to the market, it also helps in increasing the wealth.
Insurance regulator IRDAI has also put a cap on investment related charges in ULIPs. If a subscriber invests in it for 10 years or more, then it does not include the life cover of 2.25 percent.
How risky is it to invest in ULIPs?
ULIPs have the ability to take all kinds of risks, according to the goals of the clients, the option of many funds is also available to invest. This means that there is not much risk in it. While buying the policy, the customer can choose the fund according to his risk appetite. They have the option of investing in equity, debt funds or a mix of both, depending on the risk involved.
Surrender ULIP
Many people assume that the ULIC cannot be surrendered before the date of maturity. However, this is not true. Customers have the option to surrender the policy before maturity. They have this option after the lock-in period or the fund value gets deposited in full.
Long term returns on ULIPs
It is also said about ULIPs that it gives high returns over the long term. You have to understand that ULIPs are market linked products and the returns on it depend on whether you choose to invest in an asset class. Like any other financial product, your returns depend on the risk appetite you are willing to take.
Life cover affected by market volatility
It is also understood that market volatility affects the life cover of ULIPs. However, it is not so. Even if there is a record fall in the market, there will be no change in the life cover amount available at the time of maturity. In case of death of the policyholder, ULIP provides life cover and fund value which is higher.
