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Tips to Choose a ULIP Plan

By Finserv MARKETS - Dec 27,2019
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Tips for Buying ULIP
ULIP or Unit Linked Insurance Plan is a long-term investment plan with dual benefits of a life cover and investment. Part of the premiums paid by the policyholder is utilized for the life cover and the rest of the funds are used for the investment plan. This plan also allows the policyholder to select from a flexible tenure spanning from five years to fifteen years. Due to its flexible and low-risk payment options ULIPs are becoming popular day by day. Here are some significant factors you should consider before opting for a ULIP.

1. Compare Key Charges:

While investing in a ULIP, you have to pay certain charges like mortality charges, fund management charges, policy administration charges, etc. Therefore, invest in a ULIP with the lowest expenses to get better returns. It’s advisable to go for a ULIP that only levies mortality and fund management charges. Before you make a decision, compare the prices offered by all companies to make an informed and efficient choice to invest your money.

2. Go for a long-term investment option

To avail bigger returns, make sure you go for a long-term investment plan when investing in a ULIP. When it comes to ULIPs, it’s easy to be tempted by commercials like, pay premiums for only 5 years. In reality, investing in a long-term ULIP of over 5 years which is the lock-in period is an ideal solution!

3. Consider the risk involved before investing

ULIPs are market-linked instruments and there is always a risk involved. Do a thorough check of the fund performance before making your choice. Make sure you stay away from the funds that have consistently underperformed in the market.

4. Tax benefits:

Note that a ULIP plan is the most beneficial when applied for a longer time span. To avail tax benefits on your ULIP plan, you should not terminate the plan before the 5-year lock-in period. If a policyholder terminates their policy before the lock-in period of 5 years, all the tax benefits availed to date will be reversed.

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Bajaj Finserv Direct Limited ("BFDL") is primarily engaged in distribution of financial products and services through its digital platform (“Bajaj Finserv MARKETS”) and inter alia renders services of customer acquisition, providing preliminary credit support activities, fulfilment services and post-acquisition customer services to Banks, NBFCs, HFCs. BFDL is also a registered Corporate Agent (Composite) under valid IRDAI registration number: CA0551 valid till 10-Apr-2024 for solicitation and servicing of Insurance Products. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522