Investment is a common activity that everybody is doing. But are you really planning before investing. Taking the right action in investment of your hard earn money is not so easy. Due to wide range of investment options available it is become difficult to decide whether to invest in equity, commodities, insurance, mutual funds or in any other avenues.
Investment in equity gives high returns but there is a high risk factor associated with it. On the other hand investment in traditional insurance plans gives you protection against adverse and unforeseen events but there is no exposure to equity markets. Investment in banking instruments give you fixed returns with lesser risk but it will not help you to multiply your wealth so all the time will be in dilemma to choose the best investment option.
One of the best options to overcome all these issues is to put your money is ULIPs which is a hybrid instrument and is a combination of insurance and investment. But before going for ULIP you should get all the details about it and judge accordingly.
ULIP stands for Unit Linked Insurance Plan. ULIP is life insurance policy which provides you with both risk cover and investment. ULIPs are not like traditional plans as it is subject to market risk where the risk is borne by you and investment risk is related to stock markets.
It enables you to secure protection for your family in case on any unfavourable event and at the same time you can get return on your premium invested. In simple words we can say that ULIP are the investment instruments, which tries to fulfill your investment need and saves you from the hassles of managing and tracking a portfolio with coverage for your life.
You can find a wide range of funds to suit your investments objectives, risk profiles, and time horizon. Different funds have different risk profiles and return potential. Some of the funds are;
Unit fund is formed by pooling invested portion of the premiums paid by you after deducting all the charges and premium for risk over.
See Also: Understanding ULIP Before Investing
NAV stands for Net Assest Value. It means the value per unit of fund on the given date. You can easily get the NAV’s of various ULIPs on the website of respective company.
All the benefits come with the cost so here also you have to bear some charges associated with ULIPs. The charge structure varies from insurers to insurers. But some of the common fees and charges are given below :
ULIPs provide you to encash your units before the maturity date. When you go for premature partial or full encashment of units you have to pay Surrender Charges.
See Also: Choose Best ULIP Plan In India
Now you are aware about some of common charges and costs associated with ULIPs, let us look into the main benefits you get by investing in ULIPs. As you know ULIPs gives both risk cover and investment options but in fact the benefits are much more then this, some of them are listed below;
When you invest in ULIPs you are exposed to the stock markets which other traditional policies like endowment, term policy doesn’t provide. You are given lots of options under ULIPSs to choose from equity, debt and balance funds. You can opt for any of the above on the basis of your risk profile.
See Also: IRDA Caps New Charges on ULIP
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