Investment Plans 412 views August 19, 2021

Unit-linked Insurance Plans (ULIPs) offer you both life cover and investment benefits in exchange for the premium payable towards the same. In case you die during the policy term, your dependents will receive a handsome payout. Besides, investment payouts will come at maturity or even during different stages of this life insurance policy. Sounds good! However, the lack of due diligence can make you choose a plan that may not meet your expectations going forward. Either you fail to achieve your financial goals or lose sleep seeing the ups and downs in the investment value.


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So for a smooth experience, choose the best unit-linked insurance plan that helps meet your needs and goes in sync with your risk appetite. But to identify the same, you may need elaboration which we have done in this article. Go through the same and choose the ULIP accordingly.

Things to Keep in Mind When Choosing the Best Unit-linked Insurance Plan

Broadly, we talked about the need to evaluate our goals and risk appetite in pursuit of choosing the best unit-linked insurance plan. It’s time we delve deeper into these aspects.

Choose the Fund Option of ULIPs Based on Your Goals and Risk Appetite

A portion of the premium towards the ULIP plan goes into securing the future of your loved ones in your absence and another in different investments – equity, debt or balanced funds. The fund selection and the risk involved in the same is your concern only.

Equity funds usually generate high returns over the long term. So if you have a high-risk appetite and want a corpus for goals such as wedding, education and home purchase, consider choosing an equity-oriented ULIP.

Whereas debt funds aim for the safety of invested capital and generate reasonable returns. If your risk appetite is on the lower side, debt funds will suit you.

Whereas balanced funds look to do both as they invest in equity and debt instruments in proportions as specified in your policy document.

Based on your goals and risk appetite, you can choose the right fund for yourself.

Choose a Plan with Optimum Life Insurance Cover

Evaluating life insurance cover is as important as analyzing the fund option. The reason being the motto of a life insurance plan is to have adequate protection for your loved ones in your absence. So, give due consideration to the same when choosing the ULIP. And if you don’t have a term insurance plan, having the maximum life cover through ULIP will only assure you financially.

Analyze the Premium Redirection Feature of ULIPs

Unit-linked insurance plans enable you to invest your future premiums in funds apart from the base ones. Such investment flexibility boosts the scope for enhanced returns. To maximize, it is important to redirect the premium to funds that have been performing well over the years. You can check the returns of funds online to choose the right one for redirection. Further, the premium redirection facility comes with a fee. So, check the cost too when looking to redirect.

Evaluate the Fund Switching Option

ULIPs also allow you to move your investments from debt to equity and the other way round through the switching facility. So if a particular fund of the ULIP is not doing well, you can switch your investments lying in the same to some other performing funds. It is also important to keep an eye on the returns of the ULIP fund so that you can gain handsomely while switching. What’s more, you can have free switches. While some insurers offer unlimited free switches, some charge after 5-8 instances at INR 50-300 per transaction.

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