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You may have been told that it’s best to look at insurance and investments as two separate topics. But did you know that ULIPs combine both for one easy plan?

If you’re new to ULIPs, let’s take a look at some helpful information. Our goal is to make sure you a better informed so that you choose the right plan options.

By understanding the benefits of these entities, you will be able to better decide on the right amount to invest in each.


 

  • 1) Understanding ULIPs

 

ULIP (unit-link insurance plans) are a great way to give you a returns on investments and protection at the same time. When you pay the required premium, it is split up into two forms of payment.

One goes into investing in stock. The other is applied to your protection plan. Many people look to do both and having a ULIP kills two birds with one stone. Many inexpensive ULIP options are becoming available, giving you a wide range of plans to choose from.

A nice benefit of a ULIP plan is their flexibility. You get to decide where your investments go. Want to put it toward debt? No problem. Would you rather invest it into equities? ULIPs have you covered.

 

  • 2) Some Advantages of ULIPs

 

Unlike other plans, you are in control of your money. You get to manage how much money is shelled out and where it goes. You also get to say how much money goes toward your protection. Any investments are also under your say. 

Another great plus of ULIPs is their designation under the Income Tax Act. This gives ULIPs tax benefits.

 

  • 3) Understanding Mutual Funds 

 

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Want to make a small monthly payment using a SIP to go toward an investment? You can do this with ULIPs and avoid paying a high yearly premium. And since Mutual Funds act as standalone products of investment, you can invest in a low-risk debt. Conversely, Mutual Funds also allow you to invest in markets with high-risk equities.

 

  • 4) Combining ULIPs and Mutual Funds 

 

It may seem like a unique concept, but it’s a highly effective and important one that works. You can choose to combine these two entities for easier management of your financial plan.

With ULIPs, it pays to be patient. They work best by giving you nice long-term returns over several years or more. You’ll be covered for life, but you may not see any returns for nearly a decade. If you decide to invest, it needs to be for the long haul.

Since Mutual Funds don’t give you any protective coverage, the idea of combining them with ULIP plans makes more sense. You need to be aware that if you go with a ULIP, you are going to be locked for at least five years. 

You won’t be able to take any money out that you have invested. Since Mutual Funds work just the opposite, you can withdraw your invested money at any time that you decide you need it.

 

  • Conclusion

 

As you can see, combining both plans can serve to make up where one lacks. They work together to give you a more comprehensive plan that gives you more options and flexibility.

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