Tuesday, June 15, 2021

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4 Strategies To Track Your ULIP Plan’s Performance

PUNJAB NEWS EXPRESS | June 01, 2021 07:43 PM

When it comes to financial investments, the longer you stay invested, the more rewarding they become. Best ULIP plans are no exception to this rule. In fact, a ULIP plan has plenty of features that encourage investors to stay invested for a long time. 

But what is ULIP and how can it help you increase your wealth? ULIP is an insurance policy that offers you an opportunity to not only provide a protective life cover for your family but also help you increase your wealth over time. It comes with tax-free withdrawal facility that can be availed after you have completed the lock-in period of five years. It is one of the many features that allow you to meet short-term goals while staying invested in a long-term plan. 

However, the key to earn rewards is to invest regularly and for a long duration of time. The best ULIP plan offers multiple fund options. For instance, you have the flexibility to allocate your funds into debt or equity funds based on your risk appetite. 

Once your corpus has grown, you can withdraw that money to meet your financial goals. 

Strategies to Track ULIP Performance

ULIP is a combination of insurance and investment that an investor may not fully understand or make the right choices to leverage the full benefits of their policy. That may prove to be an expensive error as the entire risk is borne by the policyholder. But don’t worry. Here are some strategies that will help you minimize the risk.  

  • Switch Between Funds 

The best ULIP plan will allow you to switch between debt and equity funds as per your risk tolerance and market volatility. However, before you make that switch, it is important to understand the fund’s performance, understanding of the market, and your own financial commitment. A ULIP plan allows you to make up to four free switches in a financial year.  

  • Allocate The Funds Correctly  

You need to orient your funds with your long-term requirements to minimize your risks and increase your returns. Therefore, it is necessary to choose your funds carefully so that they not only meet your financial goals but also your risk tolerance. 

If you want to benefit from long-term capital growth, then you must go for equity funds. These funds offer high returns over a long period of time. 

At the same time, conservative investors can invest in debt funds to preserve their capital. There is also an option to choose hybrid funds that are a combination of debt and equity. Be sure to educate yourself about the risks and rewards before investing in a fund type.  

  • Stay Updated 

Stay up-to-speed about the funds to ensure that your investment strategy and fund allocation is aligned with the market volatility and outlook. It would help if you also kept an eye out for market opportunities that can allow you to increase your returns.  

  • Avoid Surrendering 

A ULIP plan comes with a 5-year lock-in period that has the potential to yield you high returns over a long period of time. Therefore, it is necessary to stay invested in the policy and avoid surrendering to make quick gains. 

Benefits of ULIP Plan

Let us look at some benefits of investing in the best ULIP plan. 

  • Transparent Charge Structure 

With ULIPs, you get a transparent charge structure and expected return on your investment for the complete tenure of your policy before you even buy the product. You can also review the annual and quarterly account statements of your investment portfolio to ensure that you are getting the returns you were expecting. 

  • Flexibility 

A ULIP plan lets you choose between high, medium, and low-risk investment option based on your risk tolerance. You can also choose the sum assured or the premium as per your requirement. Additionally, the best ULIP plan lets you increase your investment portfolio with the help of top-ups.   

  • Inculcate Saving Habit 

With ULIPs in your financial portfolio, you develop a habit of saving, which helps you build a corpus of funds for your future requirements. 

  • Cash Withdrawal Facility 

In case you have an emergency, you are allowed to make partial withdrawals from your ULIP plan. After you complete the lock-in period, you will be able to make full withdrawals from your policy.  

  • Risk Spread 

The best ULIP plan gives you the benefit of market-linked wealth creation without you having to participate in the financial markets actively. You also get the life cover that protects your family from life’s misfortunes, such as your untimely passing. 

  • Tax Benefits

 The insurance premiums paid towards ULIP is eligible for tax rebate under section 80C of the Income Act, 1961. 

According to experts like Max Life Insurance, ULIP is a solid investment option that is both safe and rewarding. It can provide your loved ones with the security of a comprehensive life insurance cover and also give you the opportunity to increase your wealth over a period of time. The best ULIP plan will also allow you to diversify your investment portfolio and earn from the tax benefits. Be sure to compare plans and policy benefits online before making an investment. 

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