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Know the Right Time to Invest in ULIP

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Know the Right Time to Invest in ULIP
November 21, 2022

Table of Content

 

In this policy, the investment risks in the investment portfolio is borne by the policyholder

In the range of investment and life insurance plans you can opt for in the market today, you get the opportunity to choose a plan that suits your own financial needs uniquely. Although the plans are open to all investors, they are different in range and benefits and you can find one to suit your requirements. Therefore, finding the right insurance and investment plans is easy as you can select what you want according to your financial goals.

Among the plans you have today, Unit Linked Insurance Plans (ULIP) are among the popular choices for many retail investors who want the flexibility of insurance and investment in a single scheme. Nevertheless, is it the right time to invest in ULIPs? You may ask yourself this because plans are partly investment oriented and partly offer life insurance cover. The investment part is related to market securities. However, whichever way you look at it, investment is a must to secure your future and insurance safeguards your family in the event of your unfortunate demise. Hence, ULIPs are worth going in for at any time. The earlier you invest, the better.

What Is ULIP Plan In Insurance?

A ULIP is essentially a unit linked insurance plan. This plan has a way of integrating investment along with life insurance cover. Hence, when you pay your insurance provider a premium for a ULIP, part of this amount is allocated to investment in the markets (in debt and equity instruments) and the other part funds your life insurance cover. The investment part is much like investing in a mutual fund, and if your fund is effective and solid, you can make good gains in the long run. So, is it the right time to invest in ULIPs? The resounding answer seems to be a “yes” if you are serious about your long-run investment and insurance goals.

Invest In A ULIP Policy Now

Designed to help investors tide over market volatility as you can switch funds based on whether markets are rising or falling, ULIPs offer you great investment options at any time. The insurance part is taken care of with your premium allotment, but regarding your investment part, you have the option to choose funds that may help you get good returns. It's time you stop asking yourself, “Is it the right time to invest in ULIP?” as if you make wise choices of funds, you can only gain in the future. If you begin early, you have more time for your investment to grow. You can also track performance of a ULIP over a period and change funds to suit you as and when you feel the need.

You must note that ULIPs have the characteristic of compounding where your investment is concerned. Therefore, over a longer investment period, your wealth (including your gains) is continually and consistently reinvested to earn more capital.

Is it the right time to invest in ULIPs? It is the right time to invest in ULIPs, if you:

  • Have a steady source of income. You can change your premium allocation as you earn more, and in this way, ULIPs offer flexibility. Furthermore, as your income grows, you can increase your capital allocation and get tax benefits as well. Moreover, when you are earning well, you don’t mind taking calculated market risks to reap rich rewards.
  • Have clarity about your financial goals. This is a must for every individual. When you are aware of your financial objectives, you can match your investment accordingly. Goal-based investing helps you to achieve your financial aims in a set period of time.

Final Thoughts

As you must have gauged by now, ULIPs are investments of a long-term nature. Therefore, it's advantageous to any investor to begin the investment as soon as possible. ULIPs also have a five-year lock-in term, and this brings in an element of discipline into investment, driving you to be more focused in terms of saving and building your wealth. ULIPs may have two components, but they tackle three issues in a single policy: living a secure life, growing a financial safeguard, and building a fund to meet any emergency expenses.

Related Articles:

ARN – ED/10/22/30044

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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Disclaimer

The Unit Linked Insurance products do not offer any liquidity during the first five years of the contract. The policyholders will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of fifth year.

Unit Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. HDFC Life Insurance Company Limited is only the name of the Insurance Company, The name of the company, name of the contract does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

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