ULIP provides with much flexibility and ability for your money to grow. Understanding the minor details will help you choose the best ULIP quotation.
Over the last few years, the number of people choosing ULIP has grown. An intervention back in 2010 by the IRDAI helped this cause. Lower operating costs and more transparency influenced many people. Thus, it is obvious they are investing their hard-earned money into these policies.
Once you decided the ULIP product category, you should not ignore the few intricacies. These smaller details will help you extract the most from your money. They will help optimise and maximise your returns. The following are some common measures you should pay attention to when selecting a ULIP.
Important Factors to Consider
- A ULIP has a unique feature of allowing you to choose the funds and switching among them as and when needed. Thus, you need to find a policy that gives you access to a wider horizon of asset classes. It will help you bring about a balance in your portfolio. You will have lower risks funds to match your high-risk funds.
Having an aggressive portfolio of only equity-based funds may seem like a good option now. But, when you want to include some lower risk funds, you should have enough options to choose from.
- Look for policies that provide the convenience of buying them online. Pay for them online. Easy access to purchasing and renewing makes life easier in the long run.
- In its initial days, ULIPs got suffered due to higher costs. Things have settled down since the IRDAI’s intervention. While choosing the ULIP quote, look at the cost structure to have a clearer investment picture. You can compare the different charges by different insurance companies online. Look for policies with no allocation charges. This way your investments equal your policy premiums.
- Selecting a policy with a wider tenure adds flexibility. A policy with a 15-to-25-year term is better than a policy with the term from 5 to 15 years.
- On the lines of convenience and flexibility, search for policies providing flexible payment options. You can opt for single premiums or regular payment options or limited payment options.
- Unlike the pure investment tools, ULIPs provide the added cushion of insurance. In the case of insured’s death, the nominees get an amount either the higher of the sum assured or the fund value at the time. This is usual practice in the ULIP world. But, some insurance companies provide an added payout option of 105% of the premium amount. Keep a tab of these added features to lead you to the right ULIP.
Understanding Charges
ULIPs levy many charges. Understanding these charges can help decide which ULIP is suitable for you. Allocation charges, administrative charges, surrender charges, management charges, mortality charges and discontinuation charges are the common ones. Each fee is present for a reason. They eat into your investments. While shopping around for ULIPs, look for policies that levy off some of these fees. It will allow your policy corpus to grow faster.
Is It For You?
Before investing in ULIP, it is important to understand the entry and exit charges. Past performances are never a sign of future returns. Compare the policies with benchmarks like NIFTY or BSE to gain more clarity. Compare the premium amounts among the best ULIPs to gain help in decision-making. You should consider some core investment principles such as risk appetite, financial goals and current financial health. Knowing more about your investment options gives your leverage of selecting only the best. After all, it is your hard-earned money. It deserves the best, doesn’t it?