What are ULIPs?

Unit Linked Insurance Plans (ULIPs) are unique insurance plans that offer investment options along with a life insurance cover. This is achieved by dividing the ULIP premium into two parts. The first part goes towards the insurance cover, while the second part gets invested in the market. As a policyholder, you hold the right to increase or decrease the ratio of these two premium parts according to your financial goal. For instance, some people prefer making a 50%-50% ratio of their premiums towards insurance and investments. However, if the future financial goal is more towards long-term wealth creation, the ratio can be changed to 60%-40% or 70%-30% in favor of the investments.  

Thus, depending on your long-term financial goal, the types of ULIPs can differ. Some common types of Unit Linked Insurance Plans are-

  • ULIPs to secure your child’s future

  • ULIPs for retirement

  • ULIPs for wealth creation

Let us discuss these different ULIP types in detail

ULIPS to Secure Your Child’s Future

As parents, the biggest concern for us is to ensure that we do not fall short of finances any financial needs during the time of need of our child. With the constantly rising education costs, it is important to have enough savings so that we can sponsor quality education for our children, whether abroad or in top IB schools in India. Apart from education, it is also very important to engage your child in co-curricular activities like sports, dancing music, etc. to encourage their talents. However, the coaching for all these activities require certain fees and providing for these coaching can prove financially expensive as your child makes progress in the field. To offer some respite, there are some ULIP plans available in the market that can help secure your child’s financial future.

Key features of a ULIP child education plans are

  • In case of the untimely death of the policyholder during the ULIP tenure, the child or the appointed nominee gets a fixed amount as a form of ‘sum assured’ for his/her financial security.

  • Under a ULIP child plan, a lump sum amount is directly paid to your child upon maturity (if the child is 18 years or older). In case the child is still a minor, the amount is paid to the appointee who is expected to manage these funds until the child becomes a major.

ULIPs for Retirement

Retirement is the time where you can finally say goodbye to work-life pressure and enjoy the beginning of your golden years. Most people yearn for a relaxed retirement where they can finally spend more time with their loved ones and pursue their long-life dreams of traveling the world or pursuing any other relaxing hobby. Although it is true that retirement brings an end to your work life, there is no escaping the day-to-day expenses. While pensions or PPF savings can help take care of daily expenses after retirement, you cannot predict when you might need additional funds for any urgent need, e.g: a medical emergency. With a ULIP retirement plan, you can set a reservoir of extra funds to help take care of these unexpected financial needs during your retirement.

Key features of a ULIP retirement plan

  • The premiums paid under a ULIP retirement plan are accumulated as an investment until the time of your retirement.

  • Upon retirement, a part of your corpus is paid to you while the remaining amount gets invested in an annuity scheme. The ULIP returns on these investments are paid back to you in the form of pensions, either monthly, quarterly, or half-yearly.

ULIPs for Wealth Creation

Some ULIPs plans are created specifically for wealth creation while providing life insurance. Unlike ULIP retirement plan or ULIP child plans that are specifically designed for a set financial goal, these wealth creation ULIPs can cater to a number of financial needs. The long-term wealth creation goals can be achieved through one pay-regular pay plans, guarantee-no guarantee plans and life stage-non life staged based plans.

Finserv Markets hosts a plethora of ULIP plans for wealth creation, savings, retirement planning and much more. Visit Finserv Markets today to get insights on these great benefits and find out which ULIP plan suits you the best.  

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