The main purpose of a long-term savings plan is to secure the future financially. It means that in the future if an individual requires a good amount of money, say for his/her child's education, child's marriage, or any medical emergency, then he/she does not have to depend on someone for finances. They can easily use their investment money when in need. And ULIPs are known to be the best plan for long-term investment. So, if you are willing to invest and want to know more about ULIP plans and how they work?
Read here:
When you pay the premium for a ULIP policy, a part of it is used for providing life cover, and the rest is then invested. It gets invested into the fund you choose. The insurance company has many investment funds with varying risk levels from which you can select - balanced funds, debt, equity, or hybrid funds.
The insurance company allots 'Units' to each investor in proportion to the money that is invested. This unit's value is the Net Asset Value. Fund managers are supposed to keep track of the invested funds. Also, the units NAV increases or decreases accordingly as per the market performance.
“On the maturity of the ULIP plan, the insurance company pays you the fund value i.e., the market value.” It means that you will get the NAV multiplied by no. of units assigned to you once the ULIP plan is matured. If an unfortunate yet unpredictable situation occurs like the sudden demise of the policyholder, then the insurer pays the nominee the higher of the sum assured or the fund value. When it comes to investing in long-term investments, one needs to make a smart move, meaning that not only it should be budget-friendly but must also benefit you in every aspect regarding finance. Also, it is best to start the investments at an early age so that you get decent returns by compounding the interest on your investment. These types of investments offer you tax benefits as well.
Below are the top 5 reasons why ULIP is the best type of investment plan:
There are several types of ULIP plans you can opt for. Have a look at the list mentioned below:
Classification by Purpose
Classification by Death Benefit
Funds by ULIP Plan in which you can invest
While you go through the details of ULIP and its investment, here is a comparison table listed below so that you can get a clear idea about the types of investment plans:
| Criteria | ULIPs | Mutual Funds | Traditional Plans |
|---|---|---|---|
| Type | Investment cum Insurance Plan | Pure Investment Plan | Pure Insurance Plan |
| Investment | The money is invested in hybrid funds, equity, debt, or as per the investor’s choice | The money is invested in debt, equity, and money market instruments as per investors decision | The money is invested as per the insurer's decision |
| Liquidity | Post the mandatory lock-in period of five years | No such lock-in period except ELSS | Investment is locked till maturity |
| Loyalty | They are given in the form of booster additions over the investment tenure | No such loyalty additions | Only participating plans get a bonus provided you stay invested for a longer time period |
| Risk | Moderate Risk | High Risk | Low Risk |
Why Coverfox is a good-to-go option?
Coverfox comes with one main objective, that is to provide you the best experience while you look for insurance policies to buy investment plans to invest in. It ensures to give you all the necessary details via official sources. Coverfox also offers professional assistance if and when required. So, you can totally rely on us!
In short,
ULIPs can be an ideal option for a long-term investment. It comes with several benefits and key features. And we at Coverfox make sure you get all the details about the investment plans and insurance policies. You just need to visit Coverfox's official website, and all the answers to your insurance queries are available here at www.coverfox.com.