6 Rumors About ULIP Policy, And Why They Are Wrong!
Busting 6 Common Myths About ULIPs in Hindi
Unit Linked Insurance plans, which we ULIP policy It is also said to be a unique investment and insurance product that gives you many benefits. Nowadays people are very excited about investing in ULIP. A ULIP plan comes with a host of benefits that make it a must-have for your investment portfolio. However, there are many misconceptions among people regarding this investment product, due to which people remain apprehensive about its benefits and features.
In this article, we will clear some common misconceptions about ULIPs in the market:
1. ULIPs are expensive
Many first-time investors in ULIPs mistakenly consider it costly. However, not many people know that every time you deposit a premium, it is not only used to invest in the funds of your choice but also to provide you with a life insurance cover that will help you financially in case of your untimely death. Provides security. You can also buy a ULIP policy online to keep your cost down, it is much cheaper than offline.
2. ULIPs are risky as they are linked to market returns
When you invest in a ULIP plan in India, you get the dual benefit of investment and insurance. As explained above, a part of your premium is used to provide you with life insurance. Apart from this, the remaining part is invested in your chosen fund according to your risk tolerance.
You can choose the funds at the time of buying a ULIP policy. You can choose to invest in either debt funds or equities or a combination of both. Some insurance companies also allow you to switch between funds or redirect your future premiums to a new fund without buying a new product.
This convenience of switching between funds makes ULIPs better than monthly income schemes, where your money is invested only in low-risk securities.
3. ULIPs do not give good return on investment
The returns of a ULIP policy are determined by the performance of the asset class – debt, equity or both. With proper asset allocation and switching funds at the right time, you can get the most out of the market.
Moreover, ULIPs not only give you an opportunity to grow your wealth and build a corpus of funds, but they also secure your investments with life cover. If you keep these two points in mind then you will realize that ULIPs are indeed a strong investment option which is quite competitive and safe.
4. It is difficult to cancel a ULIP policy once purchased
According to financial experts, you should buy a ULIP policy only for your medium and long term goals. This will not only help you in accumulating wealth but will also inculcate a habit of saving in you to achieve your future goals. ULIPs also come with a lock-in period of 5 years, after which you have the option to surrender the policy.
If you make a full withdrawal before the maturity of the policy, you will not be charged any exit load charges or surrender charges. Rather, you will be paid according to your fund value. But it is not a good idea to give up your policy in the middle, unless you have alternate sources of funds.
So, ULIPs encourage you to stick with the policy if you are looking for some serious long term gains and good returns on your investment. In fact, if you stay invested in a ULIP policy with your life goals set at the time of buying the policy, then you will really get the benefit of the power of compounding.
5. If the market falls, your life cover is reduced
Just because your ULIP policy is linked to the equity market, it does not mean that your life insurance is also at risk. Even if the market falls, your life insurance is not affected. If anything happens to you, your ULIP plan will pay the policy beneficiary whichever is higher in the fund value or life cover.
6. You cannot invest surplus funds in ULIPs
The fact is that if you have surplus funds, you can top-up your existing ULIP policy. You can invest it over and above the existing premium and still you will get tax benefits as you would get in case of regular premium. You get the option to pay the top-up premium multiple times during the policy tenure.
The misconceptions surrounding ULIPs are nothing but obstacles in the way of a good investment decision. if you Read carefully about the benefits and features of the policy If you do, you will see how beneficial they are and how it will help you achieve your medium and long term goals.
There are many reputed life insurance companies that offer competitive ULIP policies. All you have to do is make the right investment decision using online tools, such as premium calculators and comparison tools.
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