‘I want to make investment but I am afraid that I will loose my money’
‘Markets are volatile, it involves too much risk’
Risk Free ULIP
These are some of the responses which one gets when you ask them about investing in the equities. ULIP is a suitable option for those who are ready to take moderate risks and want stability balanced investment products, i.e. you put your money in both equity and debt. ULIP is a product in an insurance space that is being offered by various insurance players like LIC, ICICI Prudential, Aegon Religare, HDFC Life, etc.
ULIPs vs Traditional Insurance Plans
The on-set of 2000 saw a swell in the Customer centric insurance product which brought a considerably intense competition between various insurance companies. Before the advent of ULIPS traditional Insurance Plans were on the go.
Traditional Insurance plans offer you multiple benefits such as risk cover, safety and returns. They are considered risk free why because they provide fixed return in the event of death and at the time of maturity. These plans have inferior returns but they also have lower investment risks. The biggest advantage of traditional plans is that they are flexible and transparent and are less prone to mis-selling because of a large guaranteed return.
If you are flummoxed as to which plan to choose then it requires a lot of analysis depending largely don the profile of the investor and his risk taking capacity, his/her age, income/return expectation etc.
But as Indian Economy comprises of a large population which is in 20 and 30 traditional plans are becoming otiose and redundant. As the young investors are comparatively more aggressive and go for ULIP on the other hand an older person would opt for traditional plans out of the reason of stability.
ULIPs: A Smart Choice
Unit Linked Insurance Plan is a transparent insurance product offered by various insurance companies that is very different form core insurance policies. Unlike a normal insurance policy ULIP gives an investor dual benefits of investments and insurances in one integrated package.
ULIP provides you with a variety of options to manage your returns in fluctuating markets. ULIPS gets an upper hand because of the attractive combination of capital appreciation linked to market linked investments and life cover considering your risk appetite in offering you choices of funds. ULIPS reaps investments at an optimum costs.
Take A Wise Decision
Choosing a pertinent plan for yourself largely depends upon one’s risk profile and ability, know-how of fluctuations and volatility of the markets, your financial conditions, goals and objectives should be kept in mind as they go a long way in helping you making a prudent decision. And at times it may all get too much messy as to which plan should opt and one way of mitigating is to seek advice of experts.
ULIPS are preferred mode of investment among the young generation of today. While the older generation still believes that the traditional investments are a better choice. However, just because everyone is investing in ULIP does not mean that you should also make your investments in ULIP. Investments should be made taking into consideration risk profile, volatility of the market and certainly your financial ability.
Nothing is ever risk-free. Anything that involves an investment, and trying to increase your money through a fluctuating market (dependent on things outside your own control) involves risk. If you are not a risk taker, best not to use a Unit Linked Insurance Policy. Go traditional to ensure that you and your family feel a sense of security from that.
Unit linked plans or ULIP provides double benefit of insurance plus the investment. It is a better choice over the conventional insurance. But this extra earnings comes with the risk factors and the turbulent share market. It depends on the individual as to which to choose in accordance with his requirement.