Life Insurance is no longer considered as a rigid investment. The reason behind it is the introduction of Unit Linked Insurance Plan [ULIP]. These ULIPs are a fix for those investors who are not only looking for wealth creation but also protection of insurance. Right from the time they have been introduced, ULIPs have impressive sale numbers which makes the other insurance plans less likable.
On the other hand, before investing in ULIPs every investor thinks twice. This is simply because of the perceived notion of ULIPs being expensive, risky, and so forth which makes the investors skeptical about it. While some of these perceptions might have been true in the past, today, they are only considered as misconceptions. Hence, take a look at these 6 common ULIP investment myths in order to gain maximum benefits from it:
When you invest in ULIPs, you simply make sure that your insurance and investment is protected. A ULIP Plan ensures not only the protection of your family but also investment in equity markets for the growth of your money. Whether you’re saving up for your emergency purpose or planning for an early retirement, ULIP Plans will see to it that all your financial goals are met.
Six Myths about ULIPs and their truth
Myth 1 – ULIPs are expensive
One of the most common myth about ULIP Plan is that it expensive. Before you label it as expensive, it is always advisable to understand the structure of a ULIP. Investing in an online plan is the best possible solution as it brings down the cost of ULIPs. The absence of distribution charges and agent’s commission brings down costs significantly.
Myth 2 – ULIPs only offer market linked returns
Another prevailing myth about ULIP Plan is that it only offers market linked returns which makes it a risky business. However, this is not the case as a ULIP plan offers multiple fund options. Before purchasing a plan, you are always given a choice about the type of fund you want to invest in. Later, you can pick from the diverse choices of equity, debt fund or balanced fund. You also get a high Sum Assured amount in case your investments take a hit due to market performance.
Myth 3 – ULIPs cannot be surrendered before the maturity date
Majority of investors believe that a ULIP investment cannot be surrendered before its maturity date. However, this is absolutely wrong as the investor has the right to surrender the plan before the date of maturity. While you can surrender it before the maturity date, it is advisable to do so only in cases of financial exigencies.
Myth 4 – ULIPs do not garner higher returns
An untold truth behind investing in ULIP Plans is that it offers good returns. However, these returns depend on the type of fund that you invest in. Therefore, invest in a sensible yet a proper selection of funds for maximum benefits. The right fund selection will allow you to build the funds as well as an insurance cover.
Myth 5 – ULIPs fail to provide a life coverage
The maximum benefit that one can receive from ULIP Plan is its life cover. A life cover is basically the sum insured or the fund value of the investment, whichever is the higher one. This life cover will typically ensure that all the needs and dreams of your family are fulfilled, even without your presence.
Myth 6 – Investment in ULIPs is risky
Another reason why people are afraid of investing in ULIPs is because of the notion of being risky. However, ULIPs are considered as the safest alternative as compared to other investment plans. Unit-Linked Insurance Plan offers you with a choice for selection of the fund based on your risk-bearing appetite. If you are capable of bearing risk to that level only then you should invest in it.
Lack of knowledge and understanding definitely comes in the way of investing in a ULIP Plan. This definitely gives rise to questions like ‘Why should I invest in ULIPs?’. With these six common myths busted at the right time, let your ULIP Plan serve you and your family till the very end.