ULIP or Unit Linked Insurance Plan is one of the most popular types of investment plans in India. It is one of the few insurance products in the market that offers the dual benefit of both life protection and an opportunity to invest in money market instruments. The unique thing about this insurance plan is that a part of the premium is used for insurance, and the other part is invested in various funds based on your financial goals and risk appetite. When you buy a ULIP, you have the flexibility to choose whether you want to invest in equity funds, debt funds, or balanced funds. The investment in ULIPs generally yields valuable returns, but there are a few things that you can do to boost the returns. Some of the critical tips you can consider are:
Choose the investment asset wisely
While investing your money in different funds through ULIP, you must be wary of the fund that you are investing in. You must assess your financial goals and also know your risk appetite while choosing the funds. To minimise loss, it is advised that you invest a smaller amount across different fund classes. The benefit of ULIP is that it allows you to switch between assets based on your changing financial goals.
Evaluate the Risks
Every investment asset has a different kind of risks attached to it. Equity schemes offer high return but are also known to be high-risk products, but debt funds have lesser risks but give smaller returns as compared to equities. Generally, ULIPs offer 40% exposure to equity funds, which makes them a safe option for investment.
Financial Requirements
The kind of corpus you need at different life stage depends on the requirements. That is why it is urged to invest in all sorts of equity. Suddenly, if there is a medical expense or some other expense, the money made from small tenure equities can be used for such requirements.
Regular Premium Payment
On activating a ULIP plan certain charges are included, they are policy administration, management charge, surrender change etc. These charges are mostly paid back but only after the mandatory five-year period lock-in. The money made in these five years can be carried forward to get higher interest in the long run.
Keeping up with the market
The beneficiary of any ULIP plan receives the sum assured or the fund value, whichever is higher at the time of maturity or the payout. The fund value is paid out to you after you have lived through the maturity of the policy. Keeping up with the trends of the market can help you get a higher amount or for the nominee in case of your untimely demise.
Now that you are aware of the different ways to boost your returns from ULIP investment, make sure that you get the most of it. Also, reviewing the fund’s performance periodically will help you determine which funds are providing maximum returns and the ones that are not performing well and adjust the investment accordingly.
