When your goal is to create a lasting financial legacy, choosing the right Unit-Linked Insurance Plan (ULIP) is necessary. A ULIP should balance long-term wealth creation with robust life insurance coverage that ensures your family’s financial security while building a substantial corpus for the future. The following factors will help you evaluate and select the most suitable ULIP for a legacy building.
Investment Horizon and Risk Appetite:
Legacy planning is a long-term goal, spanning 15 years or more. A longer horizon allows you to take risks through investing in equity-heavy funds for faster growth. As your risk appetite decreases, you can gradually shift to safer debt or balanced funds. Choose a ULIP that provides multiple fund options and flexible switching features so you can realign your portfolio as per life stage and market conditions.
Fees and Additional Charges:
Every ULIP has charges such as premium allocation, policy administration, fund management, and mortality charges. To maximise wealth creation, look for ULIPs with lower charges, especially in later years, or those offering chargeback benefits where some charges are refunded at maturity. A transparent and cost-efficient plan ensures your legacy corpus grows steadily.
Life Cover and Sum Assured:
In a ULIP, the life cover plays a vital role in protecting your family’s future. A good benchmark is to choose a sum assured that equals 10 to 15 times your annual income. While a higher sum assured may come with higher mortality charges, it also ensures stronger financial security for your loved ones. Choosing the right balance between cost and coverage will help you build a reliable safety net without straining your investment returns.
Loyalty Additions and Wealth Boosters:
Many ULIPs, like Promise4Growth Plus plan, offer additional benefits like long-term investor loyalty additions or wealth boosters at regular intervals. The key difference is loyalty additions reward consistent premium payments, while wealth boosters enhance your corpus by rewarding long-term policy holding.
Rider Options:
Riders add another layer of protection to your ULIP. Options like critical illness, accidental death, or disability riders ensure that your policy remains effective even if you face unforeseen challenges. For instance, a waiver of premium rider keeps your investments on track if you are unable to pay due to illness or disability, ensuring your legacy goals remain safeguarded.
