Benefits of Unit Link Insurance Plan
ULIP stands for Unit Linked Insurance Plan. It provides for life insurance where the policy value at any time varies according to the value of the underlying assets at the time. ULIP is life insurance solution that provides for the benefits of protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV).
Unit-linked life insurance is actually an insurance product where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of insurance and mutual funds. The idea here is that you put in your money and it grows with time. So you also have life cover and money also grows at the same time. You get units like in mutual funds, and the value of these units grows because the company invests it for you. ULIP provides solutions for insurance planning, financial needs, financial planning for children’s future and retirement planning. These are provided by the insurance companies or even banks. Unit link insurance plan or ULIP is the advance type of insurance plan. When you pay a premium, you are given a insurance cover and part of premium is invested in the fund of your choice. In the initial years, a major part of the premium goes towards buying an insurance cover and remaining portion is invested. You can also switch between funds if the market condition or your personal circumstances changes.
The advantage of unit-linked plans is that they are simple, clear, and easy to understand. Being transparent the policyholder gets the entire upside on the performance of his fund. Besides all the advantages they offer to the customers, unit-linked plans also lead to an efficient utilisation of capital. Unit link insurance plan is better if you want to enjoy the flexibility of investing across various asset classes or if you want higher returns. Flexibility to choose your own level of protection (the sum assured) & Option to choose from a wide variety of investment fund to invest in depending on your risk profile. The investment part of insurance is control by insurer because ULIPs offer investors the opportunity to pick a product which matches their risk profile.
A normal person gets confused when choosing right policy or plan that best suits for his needs? Advisors take advantage of this buyer's ignorance and promote those policies that fetch them the highest returns. So whenever you want to buy any new policy or investment in to any insurance plan it is better to consult with financial advisor. ULIP also serve the same function of providing insurance protection against death and provision of long term savings, but they are structured differently.
A unit-linked investment cum protection product, with its limited period premium payment facility of 5 years, premium payment flexibility, higher allocation of your premium for investment, unique special additions and life insurance benefit, not only makes your money grow but also provides your investment the special treatment that it deserves. In market there are many insurance companies provides Unit link insurance plans but buyer has got to decide which unit link insurance plan is better if you want to enjoy the flexibility of investing across various asset classes or if you want higher returns.