What Are The Different Types Of ULIPs?
A sage and smart investing approach is to have a complete life insurance policy on yourself and use your unused funds. When handled with various mindsets, many distinct ULIPs can be characterized in many ways. ULIPs are frequently divided into risk and investment purpose categories.
What are the various types of ULIP investment?
Let’s understand the various types of ULIP a little better.
- Equity funds: These ULIPs primarily invest in high-risk stocks and shares of publicly traded corporations. They are both the most dangerous and the most lucrative ULIP investment. Choose one of these plans if you believe fortune favors the brave and have a medium to high-risk appetite. Win here, and you win big – high payoff at high risk.
- Income, fixed-interest, and bond funds: With these ULIPs, your money will be invested in medium-risk, medium-reward securities like corporate bonds, fixed-income securities, etc. Low to medium reward, medium to high risk.
- Cash funds: Your corpus will be invested in money market funds, cash and bank deposits, and other low-risk money market instruments when you purchase one of these ULIPs: minimal reward and virtually no risk.
- Balanced funds: Because they vary the investment amount to various locations, they are the most reliable and wisest investment. It makes proportionate investments, splitting the entire investable amount between fixed-interest instruments with reduced risk and equity investments in high-risk assets like firm stocks. High reward with moderate risk.
ULIPs based on the goals of the investments:
- To pay for your kid’s education: It fits the criteria for protecting your children and dependents against financial hardship in the case of your passing and plans payouts in such a way that they will be used for the intended purpose, making this one among the more common reasons for choosing a ULIP. These ULIPs typically pay rewards once a year when required for the particular use for which they were purchased.
- To build a corpus of funds: People typically let the insurance company manage their savings rather than going through hell to find the proper investment with the right interest rate and term. Building a sizable corpus is time-consuming when tackled through the conventional technique of hard labor. ULIPs limit your involvement in the money administration and allow you to share in the gains. The estimated value of your types of ULIP investment can be calculated using a ULIP plan calculator based on the premiums, tenures, and other information you enter.
ULIPs for wealth creation are available:
- Life stage-based s/ non-life stage based: As you age, these programs, which see themselves as your financial assistants, shift your investments among various risk levels. Investments will alternate between stock and debt instruments in varying ratios and multiple times. Investments will alternate between stock and debt instruments in varying proportions and at various times. The plan knows that risk appetite is strongest in youth and that priorities change over time.
- Guarantee / non-guarantee: Today’s ULIPs offer assured benefits and enhancements but typically have relatively long terms. Though the payoff is slightly less, guaranteed ULIPs shield the investor from all risks. Non-guaranteed ULIPs provide a selection of investments with a range of risk exposures. Although they make no guarantees, they give you the freedom to choose when and where your money is spent.
- Single premium / regular premium: Anyone can pay a single or common dividend. Common premium plans divide and spread the premium payments over regular intervals. In contrast, single premium plans call for a single premium payment at the plan’s start. You can use a ULIP plan calculator to estimate future returns and the value of a ULIP investment.
- To make retirement plans: Retirement corpus building ULIPs can save you if your regular source of income quits and you’ve reached the end of your working years. Particular ULIP programs are created to care for you in your later years. After the plan expires, they still offer regular payouts, and you will still get enough money to live comfortably. You won’t fully appreciate the advantages of working for money and having money work for you until these payments begin. *The insurer provides all savings per the IRDAI-approved insurance plan. Standard T&C applies.
- To handle personal or medical emergencies: There are occasionally significant expenses that we cannot avoid. When you least expect it, unexpected things like medical problems, accidents, legal costs, settlement amounts, debt, etc., can hit you hard. Some programs assist you in creating a corpus that you can utilize in place of a health insurance policy. The plan lets you partially withdraw from your greater maturity corpus to cover the urgent expense if you are in the hospital and require rapid cash.