4 Tips for buying ULIP like a veteran

Unit Linked Insurance Plan, aka Unit Linked Insurance Plan (ULIP), is a hybrid plan and offers a unique combination of both – protection and savings. Apart from being insurance, the ULIP policy also serves as a channel to various market-linked assets which help to fulfil your long-term goals. Some of these goals could be paying for your child’s education or sponsoring your children’s marriage, etc. While saving for such purposes may demand substantial monthly savings, with ULIP, you can start small and have an excellent financial corpus ready in due time.

However, although ULIP investment plan allows you to invest in both – equity and bonds, it is less volatile to the market fluctuations. So, you must pick the one that best suits your needs. To do so, here are some parameters to consider.

1. Sustainability

A primary parameter, perhaps but, the performance of a ULIP in the past, can help you determine if it will grow in the future. If the ULIP insurance policy has a potential of growing, then, a look in the past will also help you estimate what per cent of growth can you reach. With this information at hand, it will thus be easy for you to pick the right ULIP policy that will help you achieve your goals, financially.

2. The Combo-approach:

While buying a ULIP policy, always opt for a combo approach. This approach will help you get the best of equity and bonds and other assets class. With this will not only make your portfolio be less volatile to the market but also, increase your chances of creating a financial corpus at the earliest.

3. Year-wise planning:

At the time of buying a ULIP plan, you are also offered free professional manager of your policy. It is at this time that you should understand if your professional manager offers to plan your portfolio year-wise. If not, then try and opt for a policy where a year-wise plan is either included, or it is something that you can opt for. The better your investment is planned the more benefits you reap.

4. Tax benefits:

Another parameter to look for is the per cent of tax reduction that the policy offers. Usually, an investment in ULIP will provide you with tax redemption; however, the per cent may vary. Hence, it is crucial to understand how much per cent of tax reduction will you policy offer. Some of the best ULIP plans in India offer a substantial number of tax redemption on the payable premiums.

Once you have done the things as mentioned above, then you can calculate and see the mathematical working of your policy with the help of the ULIP premium calculator. An accurate representation of your policy will help you pick a ULIP policy that is both – lucrative and can help you meet your long-term goals.