The coverage could be increase or decrease at any point of time depending upon the needs and requirements. But, investors have to be actively involved with the product as the investment risk depends on him or her.
While choosing a ULIP, it is important to understand plans thoroughly in terms of types of market-linked funds available, the fees associated with it, tenure you wish to take the plans for & switching needs. The choice requires considerable analysis and largely depends on the profile and goal of the investor. An investor’s risk taking ability, his or her age, income sources, family needs or return expectation is a crucial factor in determining the right choice for them. It is genuine tendency that a young investor may be more aggressive and opt for equity based funds, whereas an older person with same income bracket may pool his or her money in debt oriented funds to produce safer returns.
Let us discuss a few tips to choose the right product:
The selection of the amount of insurance cover, type of funds greatly depends upon the risk taking ability of the investor. This ability is ascertained through a number of factors, which include the following:
Income
Your income will determine which type of market-linked fund you wish to opt for. If you have sound income source you will look for balanced funds, but if your income source is low naturally you will have to invest in aggressive funds to produce the desired corpus at the end of your plan tenure.
Investment Amount
The amount that you fuel in towards your ULIP plan will also determine the choice of product. In case an investor expects substantial returns, he or she will be willing to take the risk with ULIPs, whereas for moderate but assured returns, sticking to traditional insurance plans would be better.
Volatility
The kind of volatility an investor is willing to handle also affects the investment decision. It is advisable you should consult financial expert time to time to handle volatility, market movements, future projections and best time for fund switching if any particular fund is not giving the desired result.
Age & Family Members
Your age and number of dependents is directly proportional to the risk taking ability. A younger person will tend to stay invested to average out market fluctuations, hence he or she has a higher risk appetite. But middle to older age person with fewer dependents will invest in safe bonds or funds to produce secured results most likely retirement planners will have such funds on their wish-list.
Important Suggestion
Best Ulip Insurance Policy are market-linked funds that can fulfill your dreams of high returns and eventually give sound financial future for you and your family. But never get carried away and make emotional decision during market crisis or when the product is doing exceptionally well. Understand your risk potential and accordingly go for premium payments. Start at young age, invest in equity based funds, books profits and move the earning to debt oriented funds to produce safer result at the end. Knowing one’s risk profile, financial situation, the nitty-gritties of various financial instruments, plan with an objective in mind will prove helpful in making a wise decision.
Source:http://www.basearticles.com/Article/247193/How-to-extract-the-best-out-of-ULIP-plans.html
