YOU LEAP ! Whats that ?

You Leap ! no no it's ULIP - Unit linked Insurance Plans. ULIPs are for those who have a greater risk appetite for wealth creation. Here the money is invested in market-linked instruments like stocks, corporate bonds and government securities. A major portion of money is invested in Equity where the returns are higher in the long run so if you are planning to invest for a longer run & get the Life Insurance coverage & investment benefits at the same time then one must go for ULIPS.

Unit-linked life insurance products are those where the benefits are expressed in terms of number of units and unit price and all depends on the NAV.

Unit-linked products are exempted from tax and they provide life insurance which makes it an attractive investment tool in a portfolio. Unit Linked Insurance Policies as an investment are similar to mutual funds in terms of their structure and functioning, sometime ULIP is also compared to Life Insurance with profits

The advantage of Unit linked plans are 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. The good time to buy a ULIP is when one can expect long-term growth ahead. This is especially so if one also believes that current market values (stock valuations) are relatively low.

Illustrations are shown to the client by the advisor to give him an idea about the returns on his policy. Agents are bound by guidelines to show illustrations based on an optimistic estimate of 10% and a conservative estimate of 6%. However ULIPS have shown returns more that 10%. Also note that the insurance company must state the ULIP charges explicitly

Be cautious of the marketing gimmicks, though IRDA, to their credit, did intervene at regular intervals to infuse some much-needed sanity.

If you would like to know how life insurance can help you meet your financial requirements please mail us at indiainvestinsure(at)gmail(dot)com