A ULIP policy can be a unique financial product that can let you reap the benefits of investment and insurance at the same time. Due to the dual-benefits, you can invest in the capital markets as well as secure your loved ones financially. Besides, ULIP plans are flexible, affordable, convenient, and transparent form of a financial product. It can let you choose between equity and debt funds, offer low premium value, avail online ULIPs that can be purchase easily.
The management of a ULIP policy can be quiet simple. It can be handled by everyone even if you are not investment-savvy. Therefore, let’s go through these top five easy steps that can allow you to manage your ULIP policy effectively:
- Identify your life goals
As you grow older, the list of goals that you want to achieve can increase. After you cross specific milestones, such as getting married or having a child, your life goals can be buying a new house, fulfilling the educational needs of your children, and so on. Since such goals require financial backup, you should identify them in advance and purchase a ULIP policy that can align with it. With a ULIP policy, you can realize your life goals with a higher accumulation of wealth.
- Asses your risk tolerance level
A part of the ULIP policy is based on the investment. Due to the benefits of investment, many of you might buy a ULIP policy. The investment component of a ULIP policy can let you participate in the capital markets as well as earn returns based on your risk tolerance. Since investments and returns can go hand in hand, you should asses your risk appetite, which can vary from high to low. While an aggressive investor might have a high-risk appetite, a risk-averse investor can have a low-risk appetite.
- Allocate your assets
Asset allocation can be a crucial part of a ULIP policy. Before you allocate your assets, you should choose the right type of ULIP fund. As a policyholder, you can select between equity funds and debt funds based on your risk appetite and investment goals. Moreover, a ULIP policy can provide you with a switching feature to minimize your risks. The switching feature can allow you to switch from one fund to another based on market fluctuations as well as secure your invested capital based on market volatility.
- Evaluate the ULIP charges
A ULIP policy has re-emerged into a better financial product that offers low charges. Under a ULIP policy, your insurer can deduct a specific proportion of your premium amount before the allocation of funds. The deducted amount can be diverted towards the four most common ULIP charges, which can be as follows:
- Policy administration charge
- Premium allocation charge
- Fund management charge
- Mortality charge
- Keep a tab on market performance
As an investor, your biggest fear can be market fluctuation. Since a ULIP policy is a market-linked product, you should keep a tab on the ULIP performance as well as the market scenario. When you are updated about the current market conditions and performance of your funds, you can understand the impact of bigger risks and safe bets in the capital markets.
To conclude, ULIP management can be essential to understand the performance of your funds. While it can be a self-activity, you can also take help of a professional to ease your burden. Moreover, the right financial expert can allow you to reap the ULIP benefits as well as help you to grow your money faster.