What is a ULIP plan?
If you are planning to begin your financial journey, ULIP is the best option for you. A ULIP, i.e. Unit Linked Insurance Plan, will offer insurance as well as investment options in the same plan itself. Its purpose is to offer the benefit of life cover with the option to grow wealth in the long term. The list of ULIP benefits are profound. Some of the common features most ULIP plans have are free funds switching, allocate premium according to your risk appetite, flexible surrender options, availability to select from multiple rider add-ons, top-up facilities to increase your investment anytime, etc.
ULIPs are helpful for investors looking to fulfill some of their long-term goals such as building their dream home, travelling the world, saving for their kid’s education and retiring early. However, in order to fulfill these long-term life goals, you need to have a long-term investment plan in place.
Given below are the characteristics that makes ULIP plans an important investment tool for the long-term.
Estimate the retirement corpus
You must consider your current expenses, life expectancy, future medical expenses, number of dependents and the expected rate of inflation to determine your required retirement corpus. There are many online calculators, which are useful to generate estimates of your retirement corpus. A retirement premium calculator is a helpful tool to calculate how much you need to save and invest in the present so you can enjoy your life in the future. Post-retirement life should be the most relaxing phase in your life.
Estimate the tenure
Early retirement planning is vital because it helps you to accumulate a substantial corpus. Therefore, it is beneficial to start investing early. Also, invest in market-linked products, which have higher returns in the long-run.
Choose the right plan
It is very important to choose a plan, which is designed to help you meet your goals in life. As Unit Linked Insurance Plans [ULIPs] is a long-term product and it helps you invest in different fund options such as equity, debt or the combination of both, it is one of the preferred choices. If you have high-risk appetite, you can invest in equities because it has the potential to give higher returns. The lock-in period in a ULIP insurance helps in encouraging disciplined savings habit.
Plan for regular income
It is not enough to have a fairly good retirement corpus. You still must use the corpus judiciously for it to last longer. Hence, it is important to have a source of regular income post-retirement. Just a part of your corpus or even your entire corpus can be used to buy an annuity plan that will guarantee you a regular income post retirement.
Take care of health expenses
When you grow older, the expenses of healthcare will increase. Considering in these expenses is necessary while you decide on the amount that is required for retirement.
Periodic review
Your lifestyle, as well as aspirations, continue to evolve when you move from one life stage to another. Therefore, it is important to review the savings and investments allocated for the retirement fund regularly. Even if you feel that your retirement corpus is falling short of the target, you must either increase the investments or change the asset allocation for meeting the target.
Early retirement is about building a large corpus as well as fulfilling your life goals in the long-run. It is essential to choose the right investment plan, which will help build a corpus at the accumulation phase and continue to earn returns during the redemption phase.