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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