Insurance and investment are different, and the former is often considered an important financial shield against the uncertainties of the future than an investment. However, ULIP is an exceptional and complete package, providing dual benefits of life insurance and an investment plan.
With ULIP, you can plan your investment based on your financial goals and risk-taking capacity. But before planning the best ULIP policy, it is essential to understand the nature of ULIP as a product and know how they are influenced by market factors.
So, let us go ahead in this article to discuss how you can intelligently plan your investment using the best ULIP investment plan.
Understanding of Investment Options Based on the Risk Profile
Every person’s ability to handle risk is different. It is an essential factor to consider when investing in unit linked policy. You can choose from the best ULIP policy once you have measured your risk appetite. This means you should have the financial capacity for certain types of investments.
There are conservative and aggressive investors, and ULIP policies cater to all of them alike.
How Does the Market Link Aspect Affect the Investment Portfolio
- Active Investor:
Active investors take an active role in managing their ULIP plan. Such a buyer profile is willing to take on high levels of risk in the hopes of achieving a proportionately higher reward. They are interested in equity-based ULIPs because of the potential for high returns, even if they come with a higher risk. They are comfortable with market volatility and believe in the long-term potential of equities.
- Passive Investor:
This type of buyer profile prefers a more hands-off approach to managing investments. They want a set-it-and-forget-it investment option and are not interested in making frequent changes. Because of their passive investment nature, these types of buyers prefer safer investments and are willing to earn a lower rate of return. They often invest in debt-based ULIPs because of the relative stability of fixed-income investments.
- Hybrid Investor:
This buyer profile wants the best of both worlds — the ability to take an active role in managing their investments when needed while having the option of a more hands-off approach.
Generally, hybrid investors choose balanced ULIPs that offer both the Switching Option and Auto Allocation Option, allowing them to customise their investments while having the option of automatic diversification.
How to Smartly Plan Investment using ULIP
- Maintain Lock-in period
There is a 5-year lock-in period for ULIP plans, and investors are obliged to maintain their investment for at least five years before any partial withdrawal can be made. This lock-in period can create wealth in the long run and help investors achieve important life goals.
- Discipline toward premiums payments
With discipline towards a Unit-linked plan for a minimum of five years and beyond, you can privilege loyalty additions to your account from your insurer. These benefits are a reward for your dedication and self-discipline as an investor.
In addition, you can check the Tata AIA ULIP plan if you are looking for a reputed name for your ULIP investment. They also provide various bonuses and loyalty for maintaining discipline towards premium payments.
- Stay invested for a significant period.
It is always recommended to stay invested for more than the lock-in period. If you remain invested for a significant amount of time, you benefit from the compounding effect and earn higher rewards. Further, the wealth boosters offered by insurers could help you accumulate a more substantial corpus if you remain invested for an extended period.
- Diverse ULIP portfolio
Based on your risk appetite, ULIPs provide a range of portfolio management plans to safeguard your capital and returns. In addition, a diversified portfolio ensures systematic adjustment of loss against profit, but one needs to review & monitor the profile regularly for best returns through the Unit linked policy.
Investment using ULIP is a smart move to secure your future and achieve life goals as well. You have to be a little aware of the market-moving incidents or depend on expert guidance to create wealth in the long run. Reputed plans like Tata AIA ULIP plan have a dedicated team of experts who guide investors in choosing the right investment plan.