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With Sensex on its northward journey, it has gained points in not just hitting new highs but also attracting more investors. Investment in equity is just becoming irresistible and tempting.
The mutual industry has grown at a rapid pace thanks to the tax benefit element added to it. But nevertheless, insurance industry is not slowing down either especially when it has Unit Linked Insurance Plans (Ulips) to boast about.
Being a perfect combination of insurance and investment, ULIP products is finding more takers. Not only does the individual get insurance protection but he also gets an alluring chance to be a part of the booming equity market.
But Ulips also has many critics on its plate. So is this purchase worth it?
The answer to this is very dicey. If with a single product you are getting two major aspects of your investments taken care of then there's nothing like it.
What it is?
Like mentioned earlier, Ulips is an insurance cum investment product where the premium that you pay is invested in the stock market and also insures you. Insurance companies give you a choice of funds to invest in ranging from high to low risk. So based on your risk profile, choose the fund that you want to invest in. A bit of research would come handy.
Why Ulip?
You ask why. The answer lies in the raging bull market. The market is refusing to go down and you need no better reason to invest in it. You can keep invested in the funds of your choice, and reap the profits that it offers. The market is climbing new highs that promise to give you good returns.
Don't look at it from short-term perspective:
A long-term investment approach is what you need when buying a unit linked plan. Purchasing the product with the intention of exiting at a short stage will not fetch the kind of result that it holds. In the short-run the market can be very volatile and your returns can be disheartening.
Consult your insurance advisor:
An advisor has a better understanding of various plans. Ask as many questions to clear misconceptions or to gain better understanding of the products. You could even speak to your friends who have similar choices in buying insurance plans.
Make sure your agent gives you the kind of service you require.
Which one?
Since Ulips are the flavour of the season, you would find it in abundance with every insurance company. It is suitable for any individual provided you know what risks are involved. Also, only long-term approach can work out to give decent returns. It can be a good option over endowment policy, which gives comparatively lesser returns, of course taking into account the booming stock market.
If understood well and having worked the parameters correctly, Ulips can be good insurance choice.