How to Choose Best Unit Linked Insurance Plans?

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ULIP
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How to Choose Best Unit Linked Insurance Plans?
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• There are several insurance plans, one among is
  Unit linked insurance plan (ULIP). What is unit
  linked insurance plan (ULIP) and to whom this
  would be best suitable. How to choose best unit
  link insurance plan (ULIP)?
• What is Unit linked insurance plan?
• Unit linked insurance plan is a combination of
  Insurance and investment. With the insurance
  premiums paid by insurer, part of the premium
  amount is taken away for risk cover and admin
  charges, balance amount is invested in mutual
  funds by way of allotting mutual fund units.
• How to choose best unit linked insurance plans?
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• Track the performance of ULIP The returns on the
  ULIP depend upon performance of the fund in the
  capital market. Track the performance of the ULIP
  before investing in such ULIPs.
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• Choose the scheme suitable for you There are
  various schemes offered in ULIP like Equity
  funds, Debt funds, balance funds etc., Hence the
  risk in ULIP is borne by the insurer/investor.
• Aggressive investors can take ULIP with equity
  funds scheme. Moderate investors can take ULIP in
  combination of equity and debt funds scheme.
  Conservative investors can take ULIP with debt
  funds scheme.
• Keep an eye on expenses charged in ULIP There
  are various charges allocated by insurance
  companies before transferring the money towards
  fund units. These charges are generally ranging
  between 2.5 to 3 depending on the insurance
  company.
• Choosing insurance company that charge low fees
  would benefit the investor
• Premium allocation charges
• Mortality charges i.e. the cost of insurance
  coverage

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Fund management fees Administration charges for
running the fund The amount deducted for
pre-mature withdrawal and is charged by
cancellation of units. Fund switching charges.
These are charged after the free switch options
are over. Switch option available ULIP would
provide option for you to switch among the
various funds. Hence if you think that markets
have reached high, switch ULIP option to debt
funds to reduce the risks. Insurance companies
offer free switch options in a year. After these
free switch options, they charge some fees when
you use additional switch options. Lock-in
period You can withdraw the ULIP after the
lock-in period of 5 years. Some more facts about
Unit linked insurance plan
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Know that it is long term investment strategy
The investment in ULIP should be done for long
term as equity markets provide good returns over
a period of time. These should not be treated as
short term investment options. You can win by
adopting various strategies during bullish
market There are several investors who
surrendered the ULIP units when market crashed.
It is the time where one should invest during
such market falls to en-cash and win in the long
run. You should know this before considering any
ULIP. You should know that you can do Top-ups in
ULIP Investors can invest additional money into
ULIP which is called Top-ups. Use the top-ups
when markets are in downfall so that you would
get more fund units and your value of investment
would increase over a period of time.
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High charges for ULIP in initial years Insurance
companies charge high charges during initial
years of ULIP. So, if you want to withdraw the
ULIP within short period, your investment value
would be reduced. ULIPS provide tax benefit
Like any other life insurance policy, ULIPs are
eligible for tax exemption under 80C of the
income tax act. Conclusion Unit linked
insurance Plan provides an option for investment
along with insurance cover. However investment in
such ULIPs should be done with long term
investment objective. Consider these tips and
invest in best unit linked insurance
plan. Source http//myinvestmentideas.com/2013/
01/how-to-choose-best-unit-linked-insurance-plans/

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