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Frequent questions and answers before investing in ULIPS

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Frequent questions and answers before investing in ULIPS
December 17, 2018
Out of the many options that are available in the market today, every option comes with its own advantages and terms. One of the most extensively beneficial investment options that have emerged in recent years is the Unit Linked Insurance Plan or ULIP. Today, investing in ULIPS comes with ranging features and even tax benefits. ULIPs come with a lock in period of five years (earlier it was three years) and serve as an ideal instrument not only for insurance but for investment as well. ULIPs offer many different features and are very advantageous in terms of flexibility of options and possibility of returns. When it comes to investing in ULIPs, there are certain frequent questions that often come in the minds of potential investors. Here is a list of the key questions about ULIPs along with their answers:

  1. How much flexibility do ULIPs offer?

    ULIPs are basically combined instruments for investment and insurance that come with flexible terms and conditions of investment options. ULIPs allow for multiple switches between funds with an upper capping on the number of free switches (usually up to ten switches). This feature of fund switching helps in securing your returns as it helps you protect your returns from market fluctuations and the corresponding expected decrease in fund performance. Therefore, you can choose between multiple fund options and thus, the level of investment flexibility offered is very high.

  2. What are the applicable charges in a ULIP?

    Initially, the charges involved in a ULIP were very high. However, nowadays, owing to the changed market scenario and guidelines given by regulatory bodies, the charges have gone down drastically. These charges are levied in the forms of fees against administration, management of funds, mortality charges etc. Some insurers may also charge a premium allocation charge.

  3. How to choose a goal-oriented ULIP investment option?

    ULIPS offer a diverse investment tool and strengthen your saving and investment portfolio in a significant manner. As mentioned, the minimum lock in period in a ULIP is five years. This means that for your short-term financial goals, ULIPs are best suited. However, this does not limit the advantages in a long term viewpoint. In fact, you must choose a ULIP plan after listing your own requirements and any specific goals that you may have. ULIPs offer maturity proceeds as well as offer term insurance coverage. Therefore, once you compare the plan features between different insurers, you will definitely be able to make an informed choice.

  4. How to know which investment funds to invest in?

    This is one of the key questions. Since you know that ULIPs offer switching between multiple funds, you must be able to know which funds to choose at the very outset. The important thing is to analyze the available data for the generated returns for the available fund options. This will enable you to have some projection in mind about the possible performance of a fund vis -vis the market conditions and you can choose accordingly.

HDFC Life offers HDFC Life Click 2 Invest ULIP – an online unit-linked plan that is aimed for enhancing your investment returns by generating market-linked returns and securing your financial interests. For details, click on the mentioned link: https://www.hdfclife.com/savings-plans /click-2-invest-ulip-plan. 

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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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