When you are younger, you might have several dreams, like purchasing a new house, travelling to new cities, starting a business venture, and so forth. However, as you grow older, you might shoulder the financial responsibilities of your family. Since the financial protection of your family would be your priority, you might sacrifice your dreams to earn more for your loved ones. A recent study shows that there is a gap between the aspirations and the readiness of young Indian adults to achieve them.
If you are still willing to achieve your unfulfilled life goals, invest in a Unit Linked Insurance Plan (ULIP). The new-age ULIP is a convenient option since it is a combination of investment and insurance. Besides, it also ensures your family’s security as it offers death benefits to them in your absence. But what is ULIP? And how does it help your family? Take a look below to understand how to achieve your life goals with a ULIP policy:
- Use the benefits of the power of compounding to the fullest
Compounding allows you to earn interest on your returns of investment. As a policyholder, you can reap the benefits of the power of compounding when you are young. When you invest in a ULIP policy in your 20s, you might have more time in your hand to build a substantial corpus for your future. For instance, if you invest Rs. 5000 regularly, your corpus would eventually grow to Rs. 70-75 Lakh when you grow older. Due to the power of compounding, you can have more funds in your ULIP policy to accomplish your life goals.
- Select the premium payment term
A ULIP policy is a flexible option for investment. It allows you to select a premium payment term based on your convenience and financial status. As a policyholder, you can pay your premium either every month or for a limited term. A ULIP plan gives you the opportunity to plan your investments prudently. Under a ULIP policy, you can even select to pay your premium once, which can be termed as a ‘Single Premium.’
- Make extensive use of the ULIP features
A ULIP policy offers different features for your betterment in the long run. Before purchasing a ULIP policy, you should carefully analyze all the ULIP features to understand if they align with your life goals. The most common features of a ULIP policy are as follows:
- Lock-in period of five years
- Tax-saving benefits under Section 80C and Section 10(10D)
- Provision of add-on covers
- Daily update on ULIP NAV
- Low charges like premium allocation charge, fund management charge, policy administration charge, mortality charge, etc.
- Diversify your investment portfolio
Under a ULIP policy, you can choose from the available types of top performing ULIP funds. A ULIP policy allows you to make a selection between these two types of funds mentioned below:
- Equity Funds
Equity funds are high-risk funds, which provide returns based on the performance of the market.
- Debt Funds
Debt funds are risk-free, which offer low returns. As you grow older, you can invest in debt funds to protect your invested capital from market-risks.
- Opt for fund switching options
The switching feature of a ULIP policy enables you to secure your money from market volatility as well as maximizes your returns based on the market conditions. When you invest in a ULIP policy, you can use the switching feature to shift from one fund to another. For instance, you should invest in debt funds when the market is down and shift to equity funds when the market rises. However, stay invested in a ULIP policy for a long duration to achieve high returns.
As highlight above, a ULIP policy suits your needs based on your risk appetite and investment goals. A ULIP policy is a long-term investment, which can ensure the higher growth of your funds. Moreover, it helps you to develop a disciplined habit of investment. With a ULIP policy, you can achieve your and your family’s goals without worrying about market volatility and financial status.