How Should You Choose Your ULIP Fund?

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How Should You Choose Your ULIP Fund?
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• ULIP products offer dual benefits of protection
  cover along with an investment component.
  Policyholders pay a certain premium either
  monthly, half-yearly or yearly basis for a term
  of around 5 to 15 years. A small portion of the
  premium goes for your account maintenance charges
  such as policy administration, fund management,
  allocation, switching charges and the rest of the
  amount goes for protection cover and investment
  in market-linked funds. These funds are generally
  categorized as equity, debt or balanced fund
  portfolio.

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• Depending upon an individual's risk appetite, the
  policyholder can either opt for high-risk funds
  that provide more exposure to equity, or
  debt-oriented funds that are low at risk. The
  premiums are pooled together to form a unit fund,
  where units are allotted to investors and a net
  asset value (NAV) is declared, which vary daily
  on the basis of the fund performance.
• Here, are a few tips to consider while opting for
  a ULIP policy
• Risk Appetite
• This factor completely depends upon your income
  source and family's future needs. It could be
  purchasing a new house, child's educational
  needs, owning a car, etc. Secondly, if you know
  market dynamics, then you can opt for the
  aggressive equity-based ULIP. Else, who are
  risk-averse should go for debt based ULIP funds.

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• Customization
• A future can't be predictable, but a problem is
  surely preventable. Ensure that your product
  offers enough flexibility to change the tenure of
  the policy, sum assured and premium payment
  frequency. Also, your plan should offer
  flexibility in the asset allocation. The ULIP
  that allows most free switches and redirection
  option in a year are preferable.
• Performance Tracking
• Just like your parents nurture you right from
  childhood, you also need to take carry on your
  ULIP plans right from the day of purchase. With
  charges being trimmed from time-to-time, you're
  likely to earn better returns. There is always a
  possibility of striking a more profitable deal.
  You can take a call on fund switching and
  accordingly work for the betterment of your
  returns.
• Claim Settlement Ratio
• Even, if you have done extensive research before
  buying a policy, but all your efforts will go in
  vain if it can't help you or your nominee with
  desired claim amount. Therefore, it is important
  to choose an insurer who is backed by an
  excellent claim settlement track record.

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• Lock-in Period
• Generally, ULIP is categorized to meet medium to
  long term goals. Some people go for short-term
  plans and expect high returns which is quite
  skeptical as the returns are based on market
  performance. It is advisable for good returns you
  should stay invested for a minimum of 8 to 10
  year period.
• Meeting Goals
• You should remember that buying UIP plans for the
  sake of cover protection or tax benefits will not
  go well for you. The life insurance cover in ULIP
  might not be sufficient when you meet any real
  life goals. You should consider it, opting to
  fulfill bigger, important and long-term goals of
  life. It's a pure form of investment and not a
  quick cash machine.
• Article Source http//EzineArticles.com/9543037

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