Yes, it becomes mandatory to check the solvency ratio of the insurance company to ensure that they will settle the claim as soon as you raise them. You can instantly view them on the homepage of the insurance provider.
How to Select the Best ULIP Plan?
5 Steps to Choose the Right ULIP Plan
You can follow the steps below to select the most appropriate ULIP plan:
Step 1: Research Well to Know About ULIPs
The first and foremost step is to conduct thorough research about ULIPs. This would ensure that you make an informed decision about buying this plan. Also, with sufficient knowledge, you can make the most out of your purchase.
Step 2: Determine Your Risk Profile
Next, assess your risk profile to ensure you allocate your premiums to the right funds. For a low-risk profile, you can contribute more to debt funds. On the contrary, you can deposit more money in equity funds for high returns.
Step 3: Compare Policies from Different Insurers
You should note that ULIP policies available in the market can notably vary from each other. So, it becomes indispensable to compare the policies of various financial institutions. This will help you purchase the best plan in the market.
Step 4: Check Out the Associated Charges
There are several additional charges associated with the purchase of a ULIP policy. These usually include fund management charges, mortality charges, partial-withdrawal charges, fund switching and administrative charges, insurance premium allocation charges, and surrender charges.
Step 5: Finalise the Plan and Pay the Premium
After adding all the charges, you should ensure that premiums are affordable. Also, you should ensure that these premiums are within your budget. Once done, you can finalise its purchase by paying the premiums.
There are several hassle-free steps that you can follow to purchase a ULIP policy from the comfort of your home.
Steps to Buy a ULIP Policy Online
Below are some simple steps that you can follow to purchase a ULIP policy:
Step 1: Visit the official website of your insurance provider.
Step 2: Check out ULIP products available to select one that fulfils your insurance expectations.
Step 3: Choose an appropriate tenure and premium to serve you best.
Step 4: Once done, proceed to the payments section.
Step 5: Select a payment mode at your convenience.
Step 6: Complete the payment of the premiums to start enjoying the benefits.
Furthermore, you can consider some vital factors before purchasing a ULIP policy.
Factors to Consider Before Investing in ULIP Policies
Below are some factors that you should remember before investing in a ULIP policy:
- Premiums of the Policy: You should carefully evaluate if you can pay the premiums based on your current income. This way, your monthly budget will not get too disrupted, and you can pay the premiums on time.
- Appropriate Asset Allocation: Determine your risk appetite and divide your funds among equity, debt and hybrid funds accordingly. This will help you to maximise your gains from the fluctuating market; sentiments.
- Returns from the Plan: Calculating the returns from a particular policy can be challenging. However, there are certain formulas that you can use to get an estimation of the returns that you can expect.
- Performance of a Fund: Invest your funds in high-performing assets for massive returns. To identify these assets, you will have to study the trends of their previous performance.
- Availability of Various Riders: Check the riders available with the ULIP policy. Accordingly, you can select the necessary ones for extended coverage. However, avoid purchasing the unnecessary ones as it would increase the premiums.
- Risks Associated: If your risk appetite is low, you should accordingly select comparatively stable funds associated with lower risks. On the contrary, if you are ready to take higher risks, you can go for high-return funds.
- Additional Benefits: Several aditional benefits, like tax and maturity benefits, are associated with life insurance policies. However, since they vary with the type of policy, you can check their availability before purchasing them By following this guide about choosing the best ULIP plan, you can quickly decide upon a ULIP plan congruent with your needs. This way, you can maximise profits and fulfil your financial goals before the estimated time. Furthermore, you can also ensure that your nominee gets a substantial amount in case of your untimely demise.
FAQs About How to Choose the Best ULIP Plan
Anyone looking to maximise their returns from investments can invest in ULIP. However, it is a fitting plan for individuals with a high-risk appetite, hands-on investors, and people with long-term financial goals.
The lock-in period of ULIP is five years, so it becomes mandatory to select a longer tenure. Being a long-term investment plan, you can choose a term of 15 years or more to get higher returns from ULIPs.
Yes, ULIPs plans offer a high return on investment over the long term. Since it comes with a lock-in period of 5 years, you can easily invest in them without getting lured about premature withdrawals during this period.
The value of various ULIPs are determined based on the Net Asset Value (NAV) of the funds where you are putting your money. To determine the NAV of funds you will have to subtract the liabilities from the value of assets in your fund.
Important Guides Related to ULIP Plans
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.