ULIPs are smart and safe investments – That’s what you want from your money!

We decode the utility of a ULIP as an investment option, and how it can help your money work for you even without your active intervention.

Each person with an eye on the future would like to invest in good options that offer capital appreciation. Over the years, most investors have been investing in ULIPs (Unit Linked Insurance Plans) – these are excellent options for those with a low propensity for risk. The ULIP helps you create future wealth by investing in high grade securities with as little or as much exposure as you want. Apart from capital appreciation, the fund also offers life protection to the investor.

This is why unit linked insurance plans are smart and safe investments:

* It adds an important asset to your portfolio. The ULIP offers a mix of regular savings, capital appreciation and life protection for the policy holder. You can choose to invest as little or as much as you want in it. The premiums are paid on a half-yearly or yearly basis, and they are debited from your bank account directly. This way, you save money every year. While the unit linked insurance plan invests your money in suitable options, you also get life coverage under the plan. The investment grows the longer you stay invested in it, and provided the ULIP invests in high grade shares.

* You have a modicum of control over how the ULIP appreciates. Unlike other market-linked investments, where you must simply wait and watch as the instruments appreciates or runs into a loss, a unit linked insurance plan lets you monitor its daily and annual trajectory – and also influence it. You can see the direction your investment is taking by monitoring daily NAVs (Net Asset Value). If you are not satisfied with the ULIP’s performance, you can choose to restructure it by investing in different units for better returns. This means that you can influence the unit linked plan’s eventual outcome.

* There are different options you can invest in. Broadly, there are three main unit linked plans in India at the moment:

• Active/Aggressive, which invest completely in equities for high returns
• Balanced, which invest some parts in debt and others in equity to mitigate risk
• Conservative, which invest most in debt and little in equities, for low risk investors

The unit linked insurance plan lets you switch between these three options basis the fund’s growth and your changing risk profile. By switching, you can get the best of both debt and equities to maximise the fund’s potential for appreciation. It also helps even out the risks.

* ULIPs offer affordability. The unit linked insurance plan is an affordable investment option because you can choose to invest only as much as you wish to, and also break down your annual investment over a half-yearly or yearly period. This helps you conserve your finances and allocate resources efficiently. Your fund manager will advise you to invest a large lump sum at one go to get a correspondingly high return, but you can choose to tread more cautiously and invest as per market trends.

About This Author

Shaheen Shaikh http://www.adrclinic.co.uk Joined: April 29th, 2018