October 16, 2019 6:43 am,
Are you looking for long term investment options? Then you can consider ULIPs which are the best long term investments with very good returns. But, before zeroing in on any ULIP plans you must also consider the Dos and Dont’s with ULIPs. ULIPs are always excellent long term investment options provided you invest after a thorough understanding of the plans. This article explains you understand the Dos and Donts before buying ULIPs
Let us find the Dos and Dont’s before buying ULIPs
ULIP do provide tax exemption. But, tax savings should not be the only motto for buying a ULIP. This policy can be best bought for long term investments, Wealth Creation, retirement planning or for building a corpus So, a decision that is prompted solely by the need to save taxes often results in the purchase of a wrong or an unsuitable product.
All ULIP comes with a set of charges, such as premium allocation charge, mortality charge, policy administration charge and fund management charges. So, check the charges and go for the one with minimal charges.
If you are planning for a long term investment, then ULIPs are the best options. Once you stop paying the premium, the life cover lapses. So, better plan for the long term investment and build the corpus.
Opt for the highest amount possible as the mortality charges are normally low and in the long term, this will not affect your corpus. Remember that the policy should be able to support your family after your demise.
Always remember ULIP is market-linked and fixed return is not guaranteed. Look at the past performance of various funds that are on offer before making your selection
Life cover and market volatility are inversely proportional. One should note that, irrespective of market volatility, life cover does not change and that, upon the death of the person, fund value or complete life cover, whichever higher is paid. Thus, in no way the life cover is affected.
An important point to be noted over here is that ULIPs offer life cover in addition to investment; hence they have all the riders such as Hospital Cash Benefit (HCB), Accidental Death Benefits (ACB) among others. In addition, the investor can also make a partial withdrawal to match his cash requirements in cases of calamities or emergency.
However, if you consider the investment horizon of more than 5 years, ULIPs are your best bet to provide good returns. What’s more, is that you can alter and customize the selection of a plan based on your investment. ULIPs offer insurance, which is not offered by any other pure investment vehicles.
So, you need to understand the terms and conditions before buying any ULIP plan and choose the best plan which offers risk cover along with good long term investment options. ULIPs are good for long term investors.
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