Your family and their physical and financial safety is the most important goal you have for most of your life. The second most important goal would be to ensure a good stable future for them. Planning for the future is complicated due to several events which can easily derail everything you have planned.
What will happen if due to unforeseen circumstances, you lose your job or worse, if you lose your life? This is where a life insurance plan comes to play.
A life insurance plan will not only help you save for your family’s future, but also safeguard them from your unfortunate demise. Life insurance plans are of many types and you can choose according to your income, need and preference.
For example, a term insurance plan will provide you adequate coverage for the future needs of your family and is affordable too. But that generally isn’t enough to ensure the safety of your loved ones.
You need something that helps achieve not only needs but the goals of your family, such as your child’s education. This requires a lot of money which just cannot happen with only a life cover. You also need money that keeps on growing and will stand the test of time. One type of life insurance plan that can do this is a ULIP.
What is a ULIP?
A ULIP, short for unit-linked insurance plan, is a type of life insurance plan that combines dual benefits of both investment and insurance in a single plan. A ULIP allows you to build wealth while also protecting your family’s future at the same time. A ULIP investment plan involves paying premiums that are partially used for insurance cover and partly invested in market-linked security.
Why ULIP for Long-Term Security?
ULIP is generally for long-term investment and one of the best when you want to protect an important goal. As apart from providing life cover, this also provides you with various investment opportunities such as debt, equity which you can choose from.
ULIP provides you with a high probability for long term gains as it extends to both the concepts for insurance and investment.
Here is how this plan can help you to secure a safe future for you and your family.
1. Invest your money in market-linked funds through ULIPs
ULIPs contain an investment component as well. Part of your premium is invested in market securities which are of various types. If you are looking to stay invested for the long-term and can take risks then ULIP can provide you with good returns. You can invest your money in equity, which tends to give higher growth if you put in some effort and manage your risk well.
ULIP’s such as Canara HSBC Oriental Bank of Commerce Life Insurance Invest 4G provides you with options such as Systematic transfer option, Auto rebalancing which can help in managing your risk and safeguarding return.
This will give you a large corpus that can be used in achieving your and your family’s long-term goals.
2. You have the authority to decide where your funds will be invested
ULIP gives you a range of options to invest in. You can invest your money in equity, debt funds or even the mix of the two, as per your own choice and risk appetite. This is what makes ULIP highly flexible and customizable. Everyone can invest the money according to their liking.
In this regard, ULIP provides something for everyone. If you like to take risks, you can invest your money into Equity. Whereas if you don’t want these hassles and tension, you could surely go for debt funds. This gives you full control of your investment which you can alter according to the goals you want to achieve.
Also, ULIPs have a feature of the safety switch which allows you to switch your funds between securities and protect your returns. This feature proves to be very effective in the long-run scheme of things. For example, when you are coming nearer to achieving your goals you can turn to safer investments to protect your hard-earned money.
3. ULIP gives you additional benefits for staying invested
ULIPs reward you for continuing with the policy. This is done through wealth boosters and loyalty bonus benefits.
a) Under wealth booster, a certain percentage of the annual premium is added to existing value without any additional cost. b) Loyalty addition is the extra sum you get for continuing. It is provided to keep you from surrendering the policy. Here also a percentage of the fund value is added to your existing fund.
4. ULIP provides you with life coverage
Apart from the investment component, ULIP also provides you with life coverage. This duality of life cover and investment is what sets ULIP apart from other plans. Life insurance is a very important step towards securing your future. If you are the only breadwinner for your family, taking life insurance is no less than a necessity for you.
ULIPs life cover generally provides you with a life cover that is worth a minimum of ten times your annual premium amount. The amount of life cover which is needed is to be decided by you. This depends on the goals you are looking to achieve. This ensures that your family will be taken care of in case of your untimely demise.
5. ULIP can take care of your and your family’s goals
As ULIPs are for the long term, this benefits you more when you take this policy to achieve a goal that is at least 5 years into the future. For example, your child’s higher education or marriage.
Also, policies like Invest 4G offers options such as premium funding benefit under which the insurance company will pay all the premiums due after the death of the life assured until the policy matures. This assures that family will be able to achieve their goals even after you lose your life. This carries additional charges.
If you have a vision for the long term, ULIPs are surely for you as they have a lock-in period that includes compulsory payments. Usually, a ULIP perform best if you continuously invest for at least the first five years of the policy. This helps to inculcate discipline in investing. Thus, they are a good option for the future.