For those who are new to financial planning and management, it is quite possible that you have a multitude of questions on your mind. Especially, when it comes to choosing the best ULIP plan for yourself.
Today, the market offers a plethora of options when it comes to this plan. To pick the right one, you would need a sound understanding of ULIPs.
Fret not, in this article, we give quick tips that will help you buy the best plan for yourself.
But, before we dive into the tips, let us understand what Unit Linked Insurance Plans are.
What is ULIP?
Unit Linked Insurance Policy is a dual-faceted insurance product that is issued by many insurers. ULIP requires the policyholders to make regular premium payments. The premiums are further divided into two parts. One part of it is utilised towards the insurance cover. The second part of the premium is pooled with assets of your choice and used for wealth creation.
Here are some simple tips to ensure that you select the best ULIP plan
- Measure your risk appetite:
Many may say that higher risks can lead to higher returns, however, it may not be so. You need to evaluate your risk appetite before you set out to find a plan for yourself. If you have a steadily increasing income, you can allocate your money in equity at a gradual pace.
- Choose the plan as per your goals:
Before opting for any financial instrument, it is crucial that you know your goals. This will help you select the plan, policy tenure, and premium amount accordingly.
- Monitor the market for updates:
This is perhaps the most important tip to pay heed to when you opt for a ULIP. Since these plans are subjected to market risks, it is crucial that you monitor the performances of the funds. This will help you decide better on when and how to switch your allocation. Depending upon your plan’s market performance, you can take bigger risks or play safe.
- Stay through the policy’s tenure:
Many plans allow you partial withdrawals before maturity. You can even terminate the policy mid-way. However, to reap better benefits and higher returns, it is recommended that you stay until your policy matures.
ULIP can be beneficial to create a substantial financial corpus if managed well. If you are new to the world of financial planning, you can seek help from financial experts. They can provide you with information on the various market-linked plans and their performance so that you can make an informed decision.