2020 was a challenging year for everyone. More than anything else, it made us realize the uncertainties of life. If the pandemic has taught us anything, it is the importance of having financial stability. If you want to secure your and your loved ones’ future, it is vital to start planning your investments in the correct manner. With proper long-term planning, you can create enough wealth to maintain your lifestyle through hard-times.
A Unit-Linked Insurance Plan is one of the best instruments for long-term life financial planning.
What is ULIP?
A ULIP is a life insurance policy that has the added benefit of wealth creation. When you pay a premium, the insurance provider uses a portion of it to grow your money through investments in equity or debt funds. This dual benefit of ULIP has made the policy a popular choice among Indian investors. With the right planning, you can ensure to meet your long-term life goals. Here are some strategies that can prove helpful:
1. Creating a contingency plan
With ULIPs, you have the option to prepare for the future from two fronts, life cover and investment.
As a ULIP insurance policy offers a life cover, it lets you ensure your dependents’ monetary stability. When you have a life policy, the insurer pays the death benefit to your nominees if you cannot be there due to an unfortunate event. The life cover will help your family to maintain their lifestyle without having to compromise their goals.
The investment feature of ULIPs helps you save more. ULIPs are long-term investments that increase your wealth over an extended period. It is wise to start investing in ULIPs when you are young, as you can invest in profitable funds and let your money accumulate into a significant corpus. The wealth you build with ULIPs will ensure that you can lead a comfortable life post-retirement.
2. Growing a substantial corpus over time
It is easy to ignore your long-term goals when you are facing a crisis. However, you have to understand that the current situation will change in the near future, and you must prepare yourself for life beyond COVID-19.
If you treat your ULIP insurance as a long-term investment, you can earn a large corpus in the future. Everyone understands about investments because the longer you wait, the higher your profits will be. Long-term investment planning also allows you to put your money in different funds as per the changing financial market situation.
When the units are affordable, you can buy more of them. Conversely, you can purchase fewer units when their price increases. ULIPs offer many flexible investment options, allowing you to have more control over the policy. Hence, you can start investing in ULIPs today and create fortune overtime to fulfill all your aspirations.
3. Adapting as per the situation
An essential part of growing money over time is to adapt to your changing needs and the market condition. It is easier to modify your investment strategies with a ULIP by using its fund- switching feature.
Fund-switching is a facility that permits you to move your investment among equity and debt funds as per your requirements. The insurer lets you transfer your money for free for a fixed number of times per year. Hence, if your risk appetite changes over time, you can redistribute the money from an equity fund to a debt fund to lower any possibility of loss. On the other hand, you can switch your investments from a debt fund to an equity fund if the market booms, allowing you to maximize your profits.
ULIPs are unique in terms of benefits, as they offer both life cover and an investment opportunity. When purchasing the policy, you need to find one that supports your and your family’s long-term life goals. The quickest way to get the right policy is by using a ULIP plan calculator to compare the available options.