Why You Need to Set Your Life Goals Before Investing in a ULIP

Mumbai, February 18, 2021

The breadwinner of a family has many financial responsibilities. The first job is to save enough money for achieving the family’s monetary goals in the run. If you are not entirely sure how to meet all these requirements, it is time to invest in a Unit-Linked Insurance Plan (ULIP).

What is ULIP?

If you are wondering what ULIP plan meaning is, we are here to help you understand it. ULIP is essentially a life insurance policy that also works as an investment instrument. From flexible investment options to ULIP tax benefits, this financial product has many advantages that can work in your favor.

However, this life insurance policy can only help if you have a clear idea about your family’s life goals. You need to customize the ULIP according to your individual needs to get the best out of the policy.

Here are a few ideas that can you can follow:

1. Planning the investments

When you are investing to create wealth for securing your family’s future, start by studying all the available instruments. ULIPs allow you to decide whether you want to invest in equity, debt, or a combination of both types of funds. It will help a great deal if you learn how these investment avenues work and what kind of returns they can generate. You will also understand the risk factors associated with different types of funds and use the ULIP accordingly.

Once you plan how to invest your money with ULIP, it will become easier to customize the policy accordingly and ensure that it meets your requirements. You can use a ULIP plan calculator to quickly determine the payable premium.

2. Setting long-term goals

ULIP is a long-term investment instrument, which means you can expect good returns when you let your money grow over an extended period. This feature makes ULIPs perfect for investing with a future goal in mind. For example, planning for your retirement requires you to create substantial wealth, so you do not have to worry about your finances later. Here, a long-term return from a ULIP can prove valuable. You can also invest in ULIPs to provide your children with good education or sponsor their dream wedding.

3. Considering the risk factor

Almost every investment instrument comes with a certain degree of risk. When you are putting your hard-earned money in a fund, it is vital to determine how much risk you are willing to take. If you want to generate high returns, you will have to take some risk. However, you can also invest with minimal risk and generate decent profits.

One of the significant benefits of ULIP is its flexible investment options. You can decide either to put money in a high-return fund or a relatively low-risk one. You can even divide your investment between different funds to balance risk with return. Determining your risk appetite will allow you to invest more sensibly.

4. Switching the funds timely

Apart from flexible investment options and ULIP tax benefits, the policy has another great feature, fund-switching. As you already know, ULIPs allow you to decide how to distribute your investment among equity or debt funds. You can transfer your investments depending on your changing needs andthe financial market situation. For example, when the market becomes profitable, you can move yourmoney from a debt fund to an equity fund to maximize the return. You can also shift your investments to debt funds to lower your risk if you do not want to take any chances.

Once you are done planning your investment and financial goals, it will be possible to purchase the right ULIP. Consider using a ULIP plan calculator to compare different policies in terms of premium and potential returns and find a suitable one.

(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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