Types of ULIP Plans

ULIPs are smart, flexible investment plans that provide you with the dual benefit of investment and life cover^` for you.

These plans help you to meet your long-term financial goals like your child’s higher education or marriage, buying a house, saving for your retirement, and more. To fulfil these long-term goals, ULIPs offer the flexibility to invest in equity, balanced and debt or a mix of these funds as per your risk appetite.

You can choose the fund^{^} at the time of purchase of the policy. However, your choice of funds may change during the tenure of the policy as per the change in market conditions or your risk appetite. ULIPs provide you with the flexibility to change the fund that your premium will get invested in. This can be done anytime during the tenure of the policy with a feature called premium redirection.

What is premium redirection?

ULIPs offer the option of premium redirection which helps you allocate your upcoming premium to a fund of your choice that is different from your existing fund. You can do this before the due date of your next premium, as this redirection has no impact on the last premium and it only alters the future premium.

When to redirect your premium?

Premium redirection in ULIP can help you choose from different fund options so that you get the desired returns as per your financial goals and risk appetite.

Here are some examples:

• Risk Appetite: Many investors prefer moving into low-risk debt funds as their age progresses. If you have started your investments with money allocated in high-risk equity funds at an early age, you may want to minimise market risks later in life. In such a case you may use the premium redirection feature to invest your future premiums in debt funds
• Market Fluctuations: Let’s consider that you have previously invested in a debt fund and now you see potential in the market with equity funds. You can consider premium redirection to earn higher returns

What is the difference between premium redirection and fund switch?

Fund switch and premium redirection are often believed to be the same thing. However, they differ from one another.

For instance, consider a scenario where 100% of your current premium is allocated to equity-based funds. However, you want to minimise risks and start investing in debt funds going forward. Premium redirection in life insurance refers to this investment of your future ULIP premiums in a different fund option. In this manner, your previous portfolio is unchanged but future investments will be made to the fund that you choose now.

A fund switch, on the other hand, helps you move your past funds to a new fund of your choice within the same ULIP. The fund allocation for your future premiums will be as per your choice.

How is the premium redirection feature useful?

Premium redirection brings more flexibility to your investment plan by giving you the choice to switch your future premiums to another fund. It helps get better returns from market opportunities and, at the same time invest as per your risk appetite.

Conclusion

ULIPs are investment plans with the added benefit of a life cover^` that provides financial protection to you and your loved ones. These plans enable you to meet long-term financial goals by helping you build a habit of saving and investing in a disciplined manner.

One such plan that ensures all the above-mentioned benefits is ICICI Pru Signature. This plan offers the premium redirection^$ feature as well.

Some other features of this plan are -

• Free switches: You can switch^** among the different fund types without extra charges
• Flexibility to withdraw money: In case of a financial emergency, you can withdraw a part of your funds at no extra cost^~
• Lucrative financial rewards: If you stay invested, the company offers regular wealth boosters^^ that increase your revenues
• Tax^* benefits: Apart from deductions under Section 80C^* for your ULIP premiums, you can also enjoy tax-free^* maturity benefits subject to conditions under Section 10(10D)^*

Moreover, this plan offers a wide range of funds that provides you with the flexibility to customise your plan as per your risk appetite and requirements. This makes it an ideal plan ideal for you and your family’s long-term goals.