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Is the Risk Involved in ULIPs the Same as Equity Shares?

Is the Risk Involved in ULIPs the Same as Equity Shares?

People who are solely dependent on their income for their well being are more likely to face financial crisis in case of an unfortunate event. You can generate wealth and live a peaceful life through financial planning. All you have to do is to put some money in an investment channel that ensures the financial security of your family while keeping your financial needs in mind.

So if you want to grow your wealth within a certain period, then a savings investment is the option for you. But, to initiate this, your first need is to choose the right investment option. Though there are numerous investment channels available in the market, if you are a beginner, then it's good to invest in a risk-averse option.

What is a ULIP?

ULIP, also known as a Unit Linked Insurance Plan is a market-linked investment product that allows you to invest money across multiple asset classes. As compared to other traditional life insurance plans, ULIP is different as it is linked to risk factor. This savings-cum-protection plan is considered as the best investment option among investors as it helps you to maximize your savings by investing money in multiple investment funds. Although, before investing in a ULIP plan, you need to understand that these funds are based on the stock market investment. Therefore, they are prone to risks and affect the return on investment with the market fluctuation.

The kinds of investments a ULIP offers:

The good part is that you get to choose from different types of funds and switch between them as per your needs. You can just assign the amount of your savings to these funds as per your risk appetite. The types of investment funds include - debt funds, equity funds, and balanced funds, among others. If you are reluctant to take risks, then you can invest in debt funds as they involve less risk. On the other hand, equity funds are liquid in nature. Equity Funds or growth funds are ideal for generating long-term returns. So if you are ready to take risks, then investing in equity funds can be a great option. As it will help you get good returns when the market performs well. Equity funds usually deal with company shares and have a good growth rate and are riskier among other asset classes.

Although, before investing in any of these shares, you need to evaluate certain things. The allocation of equity/debt funds varies across companies. Also, you have the right to choose your fund as per your risk appetite. And the return you get from investment depends majorly on the type of fund you choose. ULIPs also provide you with the flexibility to choose and switch funds between debt and equity for no or little extra cost. Like if the market is performing badly, you can invest in debt funds, but if the market is performing well, then you can switch from debt funds to equity funds. On the whole, the risk factor in case of ULIP investment depends totally on the market conditions. Therefore, you need to be updated on the current market scenarios so that you are well aware of the trends and can switch funds accordingly.



Besides, if you are planning to invest in ULIP plans, then you can choose to go with Invest 4G Plan by Canara HSBC OBC Life Insurance. This plan not just helps you to save for your future financial goals, but also offers the protection for life at competitive charges.

Speak to an insurance specialist now!

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