6 myths concerning investment in ULIPs

Unit joined Insurance Plans (ULIPs) square measure a good product giving that mixes advantages of insurance and investment in one instrument.

Unit joined Insurance Plans (ULIPs) square measure a good product giving that mixes advantages of insurance and investment in one instrument. However, there square measure many myths floating around ULIPs, stemming from the misunderstanding concerning their objectives, liquidity, returns, functioning, and rating. Here, we tend to bust a number of these myths:

MYTH 1: ULIPs have higher prices
Reality: the general public believe ULIPs square measure expensive investment instrument when put next to alternative merchandise, primarily as a result of the high premium allocation and fund management charges. however these charges were applicable approach back in 2008 and ULIPs have undergone vital changes since then. With the introduction of low value ULIPs, the costs square measure a lot of below before. Earlier, the costs were as high as 6-10%. However, IRDAI brought down the annual charges to three for the primary ten years of holding and a pair of.25% for over ten years.

MYTH 2: ULIPs square measure risky instruments
Reality: The second story is that ULIPs square measure a risky investment product as they solely invest within the equity market. However, you'll be able to opt for the extent of risk you would like to require by choosing funds with completely different objectives. you'll be able to opt for Associate in Nursing aggressive fund if you're a risk-taker or accept a conservative fund by subsidence for a debt-oriented fund. or else, you'll be able to additionally prefer a balanced fund (i.e., a combination of equity and debt fund). In ULIPs, you furthermore mght have the choice to change between funds supported your mode and dynamic  risk craving. as an example, in periods of volatility, you'll be able to move your investment from Associate in Nursing aggressive or balanced fund to a debt/liquid fund.

MYTH 3: ULIPs doesn't enable investment of surplus funds
Reality: you'll be able to take a ULIP with a lower premium and later prime it up once surplus funds square measure offered. indefinite quantity premiums have identical tax advantages as regular premiums. you'll be able to pay indefinite quantity premiums anytime throughout the tenure of the prevailing ULIP policy.

MYTH 4: ULIPs don't enable discontinuance
Reality: As ULIPs is interrupted with a minimum lock amount of five years, the general public are misled into basic cognitive process the instrument can't be interrupted the least bit. No surrender charges square measure levied when the completion of 5 years.

MYTH 5: Life cowl decreases with market volatility
Reality: Some investors believe that as a result of ULIPs square measure joined to equities, life cowl decreases as market dips. But, this is often not true. The life cowl remains identical even within the case of a securities industry. ULIPs either pay the whole life cowl or the fund worth, whichever is higher, if the person assured passes away.

MYTH 6: ULIPs don't give health and accident cowl
Reality: Contrary to the present story, ULIPs keep company with twin advantages of insurance and investment. similar to alternative insurance choices, ULIPs too have rider choices. most typical ones being Accidental benefit (ADB), discharge of Premium (WOP), Family financial gain profit, Hospital money profit (HCB) etc.

Moreover, since partial withdrawals square measure offered, extra money needs in such extremities or calamities is taken care of.

To sum up, ULIPs square measure fashionable nonetheless ancient investment possibility. the type of flexibility offered and also the ease with that it works, beside those current needs are a few things which might be obtained solely by sensible monetary planners. If you are doing not would like to induce into the hassles of individual coming up with, a ULIP with few riders could also be the answer.