ULIP is an Unit-Linked Investment Plan. Basically, it is an investment attached with insurance. It combines the safety of insurance protection with growing investment opportunities. In ULIPs, some part of the money is invested and some part is directed towards the insurance premiums. However, the major part of your money is contributed towards investing in stocks or bonds. The value of investment alters with the performance of underlying asset or fund that is opted for you.

Here, the fund value reflects the performance of the underlying investment either in equity or debt or a combination of both. At the time of maturity of your plan, you are entitled to receive the fund value of investment. The major benefit of ULIPs are:

It offers more flexibility as compared to other insurance policy. You can switch easily to other fund option at the lowest possible cost. You can also modify your future premium allocations and premium payments.

It ensures transparency when compared to the other traditional policies. Unlike the other insurance policies which do not give access to know about your premium payments, ULIPs will enable you to view your portfolio of fund whenever you want. Also, in most ULIPs, you can stop paying your premiums after 3 years but whereas, in other insurance policies this does not work.

It diversifies your risk without actually participating in the market. The fund which is invested in ULIP, is again invested in various other securities and hence covers or reduces your risk.

By MND A01