Many of you might have heard all the wrong things about investments like ‘investing is risky,’ ‘investing doesn’t guarantee returns.’ Years ago, the fear of investing had no bounds. According to a report in 2010, only 18% of the average Indian population invested in equity markets. Many salaried professionals preferred investing in stable investments options like Fixed Deposits, Public Provident Fund (PPF), and so on. The primary reason for staying away from the equities was the fear of market fluctuations. Today, the game of investments has changed for a lot of investors. With the new-age Unit LinkedIn Plan () introduction, many investors might be willingly walking down the investment path. A ULIP plan is a combination of investment and insurance under a single integrated plan. Although it is a market-linked product, it offers financial protection to your loved ones in your absence.
A ULIP plan is a flexible, convenient, and transparent option for investment. Additionally, it is a unique financial product, which allows you to diversify your investment portfolio. Let’s take a look at how you can diversify your portfolio with ULIPs:
It allows you to invest in your own choice of funds.
Under a ULIP policy, your insurer would give you a choice to select the type of ULIP fund based on your risk appetite.offers the following types of funds mentioned below:
Equity funds are risky. At a young age, you can afford risks since you have fewer financial responsibilities. Therefore, invest in equity funds when you are in your 20s.
Debt funds are relatively safer than equity funds. After you cross your 30s, you might have more financial dependants in your family. During this stage of your life, you should invest in debt funds since they are less risky.
It allows you to earn better returns.
The primary reason for investing is to gain better returns. When it comes to ULIPs, many of you might buy a ULIP policy to receive higher gains. However, ULIP returns depend on your selection of funds. For instance, if you have invested in an equity fund due to a high-risk appetite, you are more likely to receive high returns. Investing in debt funds can be safe, but the returns are relatively low.
When you invest in a ULIP policy, your money is directed towards these selected ULIP funds. However, the primary advantage of a ULIP policy is getting to enjoy the benefits of the power of compounding and staying invested for a long time. If you buy a ULIP policy at a young age, you have more time in hand to build a corpus for your better future. Due to compounding, you can achieve interest on your returns. Moreover, your insurance company might also provide you with additional benefits to stay invested for a long period.
It allows you to switch between funds.
Every investor has a different behavior pattern towards the invested capital. While many investors might have a low-risk appetite, the remaining can be able to take high risks. As an investor, you should create a balance to achieve more returns and protect your money from market fluctuations. The switching feature of a ULIP policy enables you to safeguard your investments from the market’s highs and lows. As a policyholder, you can switch between equity and debt funds to receive satisfactory returns. For instance, you should stick to debt funds when the market is down and switch back to equity funds when the market bounces back.
Now that you know the answer to the question, “?” don’t think twice. A ULIP plan matches the risk appetite of every type of investor. With a ULIP investment, you can participate in the capital markets and financially protect your families. ULIP insurance would ensure your families receive a death benefit in your absence.