Insurance protection and wealth creation all in one

Ever since the Unit Linked Insurance Plan (ULIP) came into existence, any individual planning to buy an insurance policy goes for it. ULIPs are by far the most successful product because not only do these provide insurance protection, but are also a great way to create wealth.

If the current success of ULIPs is anything to go by, these plans will very soon outsell every other policies present in the market. So what is ULIP? Why is it so attractive? What are its advantages over the other plans? Let’s have a look.

Currently, people are always on the lookout to enhance their incomes with the help of convenient measures and ULIPs just happen to be one of those means. Owing to the fact that a Unit Linked Insurance Plan meets both the purposes of an individual which are, insurance and investment, it is held in higher regard than endowment and term plans.

The most significant advantage of ULIPs is that these yield capital appreciation which is tied to the capital market. 

How does ULIPs work?

A specified amount from the total premium paid is allocated to make the investments once the required charges of the plan that one has chosen have been covered.

One must be well-versed with a few terms like NAV, Unit, and Unit Fund when they are making an investment in a Unit Linked Insurance Plan.

Unit Fund – The fund which is formed from all the investments made in a particular type of scheme after deducting the required expenses is known as Unit Fund.

Unit – A part of the total investment ma de in a particular type of fund is known as Unit.

NAV – NAV or Net Asset Value is the cost of a unit in a particular fund which keeps fluctuating as per the market conditions. One must always stay abreast of the NAV of the ULIPs that they have bought.

Advantages of a Unit Linked Insurance Plan

• Flexibility:  With ULIPs, one can choose the kind of investment that they want to go for. Such plans also come with feasibility factor and allow defining the amount which is to be allotted for making an investment.
•  Transparency: One can get a status on their investment, whenever they like. Every insurer in the market provides the latest NAV as soon as it fluctuates. Other than that, the insurers also update their investors about the investments with quarterly investment portfolio, annual account statement, and other such reports at regular intervals.
• Liquidity: Investors can partially withdraw money from their ULIP account after a period of five years. However, they must keep a minimum stipulate amount intact.

It would not be wrong to say that a Unit Linked Insurance Plan is a single product that comes bundled with many advantages.