A Guide To Get Better Returns With ULIP Investment

Mumbai, November 30, 2022

A frequently asked question is what is ULIP Plan and how to use it? Well, this article aims to answer that question.

ULIP is a product that offers dual benefits of life insurance and investment benefits. Your life insurance can be paid for in part by your ULIP premium. The remaining portion is used to purchase your preferred market-linked investment products.

The secret to getting the most out of your ULIP investments is to create an investment plan that can help you increase your ULIP's returns. Here are some recommendations to improve the returns on your ULIP investment.

1. Select your funds carefully

A portion of your monthly premiums may be invested in the funds you select for your ULIP plan. Market-linked products have a chance of performing unpredictably, switching between funds is always a possibility. Some ULIP plans may allow for unlimited free switching. However, it's usually preferable to choose investments you can stick with indefinitely without having to switch.

 2. Optimize your asset allocation

The way your investment portfolio is set up to balance risk and return is known as asset allocation. Maintaining your returns over time, even when certain market segments underperform, depends on your asset allocation. Your portfolio is subject to market whims if it is overly skewed toward one asset type. This does not exclude you from owning more of one specific asset than the other. It does, however, support some degree of portfolio variety. For instance, it's seen to be fairly easy to achieve optimal asset allocation by balancing an equity fund with a debt fund.

 3. Make timely premium payments.

Investments in ULIPs may migrate into a fund that has been discontinued when a premium is not paid as agreed upon. You cannot cancel your insurance during the ULIPs' statutory lock-in period, nor may you postpone paying your premiums on time. Your investment can be transferred to a discontinuation fund in either of these scenarios. The IRDAI has stipulated that "discontinuation charges" must be imposed in these circumstances, in addition to the fact that discontinuance funds would not provide any returns. It suffices to mention that timely premium payments are essential if you desire rewards.

 4. Keep an eye on how the market is behaving.

ULIP investments, in contrast to pure savings tools, can necessitate some market monitoring. Since you choose the funds you want to invest in, you may monitor their performance before it is too late. To track the performance of your investments and the profits you are producing, make sure you routinely monitor the market. Monitoring the market has the potential to both reduce losses and boost profits. Just as there are opportunities to abandon declining funds, there may be clear possibilities to convert them to more profitable funds.

 5. Keep Life-Stage Requirements in Mind

Depending on your individual demands, your needs may alter as you progress through life. At the beginning of your financial journey, you can take more chances. You not only have fewer obligations, but time is also on your side. You might have a financial safety net given by your guardians to fall back on if you make a mistake. Most people do not have access to these advantages as they get older. Therefore, it can be in their best interests to switch their ULIP investments from hazardous possibilities to safer options. Because your financial demands may inevitably change over the course of your life, it might not be a good idea to maintain the same money. A good ULIP plan is aware of these needs. This means you also have the opportunity to systematically transfer your money in order to benefit from rupee cost averaging and increase your wealth.

ULIP Tax Benefits are something that makes the plan so popular. Like any life insurance policy, there are certain tax exemptions that come with the policy. These deductions are according to Indian law. They vary depending on whether the policyholder follows the old or the new tax regime. Taxation is subject to change based on the chosen policies.

Make a wise choice when opting for a life insurance policy. A ULIP Calculator can help you determine a plan that suits you. Try to make the most out of the ULIP tax benefits and other advantages.

(Disclaimer: This is branded content. Readers are advised to exercise due diligence and discretion before entering into any correspondence, investment, purchase, business dealings or any other decision on the basis of this content.)


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