Understand the different types of ULIPs & how to achieve your specific goals
ULIPs for creating wealth
If you are looking to create wealth and also enjoy the benefit of a life cover, Unit-linked Insurance Plans (ULIPs) are the right instruments for you. You get the flexibility of using these plans to fund any of your long-term financial goals such as buying a house or funding your children's education. The added element of life cover makes a ULIP an all-round financial investment option.
Types of wealth creation ULIPs
- One Pay - Regular pay plansDepending upon your needs and premium paying capacity, you can choose from either one-pay plans or regular pay plans. In a one-pay plan, you need to pay the premium only once during the entire term of the policy. Whereas with the regular-pay plan you can pay the premium throughout the policy term, at a comfortable frequency (yearly, half-yearly or monthly).
- Guarantee – Non-guarantee plansSome wealth creation ULIPs also offer guaranteed benefits. These ULIPs are Insurance + Investment options that let you enjoy the potential of better returns over a long-term, without taking any market risk. In these plans you get a limited exposure to equity funds and are ideal if your goal is savings.
On the other hand, non-guarantee plans come with a built-in range of fund options to choose from. Here, you can invest your money as per your choice of funds. You can get a higher exposure to equity funds, and hence, enjoy the potential for higher long-term growth. These plans are ideal if your goal is wealth creation.
- Life Stage based and Non-life Stage based plansLife Stage based ULIPs work on the fact that your priorities differ at various life stages. Hence, distribute your money across equity and debt funds. The initial allocation is decided as per your age, with a higher proportion of equity and lower in debt. As your age increases, the plan gradually transfers your money from equity to debt to preserve the wealth that you have acquired. Such a strategy ensures that the asset allocation matches your age and changing financial needs at all times.
ULIPs to secure your child’s future
One of your most important responsibilities as a parent is to ensure that your children get the the best possible education for your children. You would also like them to experience various co-curricular activities like dancing, sports, painting and much more, for their all-round development.
As a parent, you would like to ensure the best for your children, get the best and make sure their future is not affected due to rising costs or an unfortunate event.
ULIPs offer you a wide range of benefits for helping you secure your children's future. Apart from the benefits mentioned above, ULIPs also offer the following:
- After staying invested for at least 5 years, you can withdraw a part of your accumulated wealth. You can use this amount to fund important education milestones of your children such as, 10th, 12th and graduation.
- In the event of the unfortunate death of the policyholder, ULIPs provide a fixed lump sum which can help your family to manage the immediate expenses.
- In addition to this, the life insurance company will pay your future premiums so that your savings keep increasing. At the end of the policy term, a lump sum will either be paid to your child (if he/she is over 18 years) or the appointee^^. This amount will help your child achieve his/her dreams.
^^An appointee is the person who receives the life cover amount on behalf of your children if child's age is less than 18 years.
ULIPs for retirement planning
Why choose ULIPs for retirement planning?
Retirement is the end of work-life and the beginning of your golden years. This is the time for you to enjoy your life, free from responsibilities and pursue your long lost interests. However, to make this dream a reality, you must start planning early for your retirement and consider investing in the right ULIP. Here are some reasons why you should start planning for your retirement now:
- Increasing retirement years:With average life expectancy increasing in India, it has become even more important to plan for a longer retirement. Life expectancy figures indicate how long an average individual lives. In India, the average life expectancy of a person aged 60 is 17.5* years. This means that an average Indian lives up to the age of 77.5. It would help if you started planning to maintain your lifestyle and take care of other expenses for such a prolonged duration.
*Abridged Life Tables - 2003-07 to 2006-10, as per the Ministry of Statistics and Programme Implementation (MOSPI) report 'Situation analysis of the elderly in India'
- Medical expenses:A major worry with increasing age is unforeseen medical expenses. With an 15-17%** annual rise, such medical costs can be difficult to manage unless you plan for them in advance.
**Source: Outlook Money
- Financial independence after retirement:You would like to live your life on your terms after your retirement. However, more than 65%* individuals above the age of 60 depend on others for their daily expenses. This shows how important it is to plan for your retirement and ensure your financial independence.
*As per the MOSPI report 'Situation analysis of the elderly in India'