ULIP stands for Unit Linked Insurance Plan. A United Linked Investment Plan (ULIP) is an instrument which combines the security provided by an insurance plan with the opportunities provided by an investment plan. It is a unique product which aims to integrate insurance as well as investment requirements. Its structure is similar to that of a mutual fund. This is how it works :
- You pay a periodic premium to the insurance company
- A part of the premium is used to provide you with an insurance cover
- The remaining amount goes to equity or debt market
- In the event of death, nominees are paid the sum assured
- In case of maturity of the policy total value of the fund will be paid to the policy holder
5 steps to select right ULIP
We present a 5-step investment plans that will guide investors in the selection process and facilitate them to choose the right ULIP.
- Understand the concept of ULIPs
- Focus on your need and risk profile
- Compare ULIP products from various insurance companies
- Go for an experienced insurance advisor
- Does your ULIP offer a minimum guarantee?
- Read the fine print before investing in ULIP
Things to keep in mind while Selecting a ULIP
- Buy insurance for risk cover
- Do not consider insurance as an investment option
- Preferably buy only a term policy
- Do not prefer savings-linked insurance policies
- Remember not to be carried away by persuasive agents and publicity.
- Buy ULIP only if your horizon is long term.
- Not insure yourself if you are a lone bird.
- Do not insure if you are wealthy.
- Do not insure the child
- Read the fine print carefully
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