Under this strategy, the policyholder can choose to invest between 8 funds and enjoys the freedom of allocating premiums based on his/her choice.
Financial needs and goals change as life progresses. Therefore, having an investment strategy that can be re-aligned to such changes in essential. The wheel of life investment strategy allows the policyholder to allocate premiums among 5 funds in pre-defined ratio. This ratio changes as the policy ages towards maturity.
This portfolio strategy enables the policyholder to make the most of market fluctuations and helps ‘secure gains’ while maintaining asset allocation.
With this strategy, policyholders can invest in funds based on their risk appetite and maintain fund allocation with monthly rebalancing.
Insurers tend to offer different fund options depending on your financial goals, risk appetite, and period of accomplishment. Each fund will impose certain risk and return potential. Here are some common fund options offered under ULIPs - • Equity Funds - Invested primarily in company stocks • Fixed Interest and Bond Funds - Invested in corporate bonds, government securities, and other fixed-income options • Cash Funds • Balanced Funds - A combination of equity-oriented funds and fixed interest funds
The premium paid towards ULIP is partly utilised for insurance and various ULIP charges. The remaining amount is used for unit allocation based on the premium payment mode.
The premium amount paid towards your ULIP is collected in a pool termed as Unit Linked Fund. This pool is managed by fund managers who further invest a partial amount in different funds of your choice. The remaining amount is used for life insurance coverage.
The fund value is nothing but the total value of the units in your ULIP investment. It is calculated as follows - Fund Value = Net Asset Value x Total no. of units held