What Drains Your Time And Energy While Buying ULIPs?

Have your ever thought twice before throwing up on investments plans? Ever fell into the hassle of choosing an investment options and had miseries of losing money or not being satisfied enough? Do you think it’s part of your interest also to exactly monitor your funds and get returns based on your fund choice. Also, there can be a additional score of securing your present from uncertainties and life risks. No one to thanks other than ULIPs, most people don’t give a second thought to them but they are the silent saviors, doing their bit to give you investment and insurance options. ULIPs have been coming in trends for a long time now. They provide long term investment opportunity along with fulfilling the insurance goals. Regardless of the income status you hold could shortfall savings and the potential to spend.

The market performance of ULIP plans are a subject to the risk associated with the funds invested and their NAVs (Net Asset Value).

How ULIPs Function?

A unit linked plan is an insurance product that gives investment options and risk coverage to the holders based on their life stage needs. The funds where the money is directed into are versed in providing investment returns. ULIPs are an investment option which is customized by the insurance holder based on his financial needs and insurance expectations.

The risks associated with unit linked insurance plans are based on the performance of the funds invested into, therefore it is advised to closely monitor the unit and makes switches accordingly. ULIPs reap benefits when invested for a long period of time. All the risks factors in a ULIP plan borne out by the unit holder hence, it is advised to choose the funds to invest based on your risk appetite and requirements.

The insurance coverage is more of a goal based saving like the education of your child, marriage, etc.

Who Should Own a ULIP?

A ULIP is the best investment option for the ones who are into the habit of deeply tracking their money and who wish to best use their money by increasing its value and make an insurance coverage of it.

ULIP plans give its holders the choice of switching their money invested from one funds to another of their choice based on risk appetite or if they aren’t satisfied. ULIPs also allow them to take ownership of their portfolio by managing them.

Below is a bit details about who should consider buying a ULIP plan for themselves:

Long term investment – ULIP plans are the best choice as an investment option for those who wish to stay invested for a longer period of time and enjoy returns.

Individuals of any phase of life – A ULIP is structured in a way that caters varied life stage needs of an individual. Different people buy ULIP to fulfill different purpose of their lives, like, saving, returns or cover benefits.

How is unit linked plans structured?

A ULIP plan is broadly known as unit linked insurance plans which can be explained as insurance plans which are linked with market units. The amounts paid by the ULIP holder are segmented into cover funds and investment funds. The insurance funds are charged including the administration charges, allocation charges etc, wherein the investment funds are priced including various important costs. This final ULIP cost is structured after making adding several ULIP charges:

In ULIPs, each unit is valued after dividing Total Fund Value by Total No. of Units.

Cost structure of a ULIP Plan:

ULIPs include various costs which are briefly explained below:

• Fund Management Cost: These cost are added as the cost of managing the funds. It is the percentage of the fund value which is calculated before making a final estimate of the Net Asset Value.
• Policy Administration: The administration charges of each ULIP plan is estimated directly by proportionately canceling the units from the funds chosen by the ULIP holder.
• Mortality Charges: The ULIP plans incur mortality charges based on the age and the required cover amount which is adjusted by providing coverage on death to the ULIP holder.
• Switch charges: The unit linked insurance holders have the choice choosing the funds of their own choice and make switches suiting their needs and the change in financial needs where these switches are free of cost to a certain number in one financial year. Charges are applicable if the number of switches per year exceeds the basic limit set by the insurance company then deductions are applicable by cancelling the proportionate no. of unit from the funds chosen.
• Surrender charges: These are the surrender charges which is applicable if the policyholder withdraws the unit before the plan maturity.
• Partial Withdrawal Charges: Your ULIP plan will cost you on your partial withdrawal before the maturity of your plan against your units, if done before 3 years since plan inception since complete policy surrender is allowed only after the first 3 years of the policy. The charges on partial premature withdrawals are mentioned in the policy term and conditions.
• Premium Allocation Charge: The premium allocation charges are calculated for deductions on a fixed rate the premiums paid.

Choose ULIPs as best investment plans.

Hi, i am Anumeha Singh. A Bloger and A Insurance adviser for Life Insurance, Term Insurance, Child Insurance, Investment Plans and Tax Saving.