The Unit Linked Insurance Plan (ULIP) is a unique amalgamation of insurance and investments. A ULIP insurance will help you create a substantial financial corpus, in the long-run. It also comes with a life cover.
A ULIP insurance company allocates some part of your investment to life insurance, and the rest of your investment is divided into equity or debt-based funds. Sometimes, the insurance company may invest your money in both debt and equity-based funds to suit your long-term goals.
Apart from this, the ULIP policy comes with a plethora of benefits, which supports your long-term goals financially. Some of these benefits are:
- 3-5 years lock-in period
- Flexibility of opting for more than one fund
- Returns are better
Below, let’s take a look at these ULIP benefits in detail.
1. Lock-in period – One of the reasons why ULIP investment works wonderfully long-term goals. The lock-in period will also help you to inculcate the habit of disciplined investing and control your spending every month. The lock-in period in ULIP is calculated from the time the policy is issued. You can opt to pay the premium/s on a monthly or annual basis, or you can pay it as a lump sum.
2. Flexibility – Another ULIP benefit is the flexibility of switching funds during the term that you have chosen. You can pick and choose, mix and match growth, equity, income, and balanced funds as per your long-term goals and risk appetite. Also, unlike shares, in ULIP, you don’t have to keep a track of companies who’s funds you have invested in. With the ULIP insurance, you can choose any policy and chance the fund allocation at any time during the term. You can then run these funds till its maturity to enjoy its long-term benefit. An invest is allowed free four switches every year.
3. Better returns: When it comes to returns, the Unit Linked Insurance Plans offer better returns than most of the investment instruments. ULIP invests into offers a unique blend of equity, growth and balanced schemes while investing in stock markets. This makes the investment less volatile to the market fluctuations. A ULIP plan also ensures that the investor earns on every investment irrespective of the market conditions.