ULIP- The best Life Insurance Plan

The term ULIP stands for Unit Linked Insurance Policy. ULIP is both insurance and an investment. The premium that the policyholder pays is divided into two parts, one goes to the life insurance and the other goes to mutual funds as investment. A ULIP holder has the option of either investing in equity or in debt.

An aggressive policy holder will choose to invest his money in equity while a conservative policy holder might chose to invest his money in debt. The money is invested during the term of the policy which may range between 5 to 15 years.

ULIPs are the investment opportunity. They are a complete package of risk cover with returns along with tax benefits. They are the type of insurance that keeps on giving. However in recent times banks have started taking advantage of the fact that more and more people wanted to invest in ULIP plans.

They started levying heavy charges going up to 80% of the premium for these policies. The Insurance Regulatory and Development Authority (IRDA) in 2010 put an end to it and capped the annual charges for ULIPs at 2.25% for the first 10 years of holding.

What adds to the appeal of these policies is that they are flexible. ULIPs allow high level of flexibility. It is very easy for a policyholder to switch from one investment variant to the other according to the market opportunities. Banks allow a set number of switches for their investors. This is a very important feature of such type of policies, since no other investment policies allow investors to make such switches.

Unit linked insurance plans can also be tailored to fit your financial standing, goals and needs. You can alter or choose an appropriate plan based on what stage of life you’re on and what your main focus is on. For example a person who has just started working and isn’t married will have different needs than a person who has a family of three to look after.

You can choose your ULIP benefits based on the needs of you and your family. This makes ULIPs the best way to insure your life as well as invest your money.

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