Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
US Dollar Rallies Off Support But Is This A Top Or Bottom? - 19th June 19
Most Income Investors Are Picking Up Nickels in Front of a Steamroller - 19th June 19
Is the Stock Market’s Volatility About to Spike? - 19th June 19
Facebook's Libra Crypto currency vs Bitcoin: Five Key Differences - 19th June 19
Fed May Trigger Wild Swing In Stock Index and Precious Metals - 19th June 19
How Long Do Land Rover Discovery Sport Brake Pads Last? - 19th June 19
Gold Golden 'Moment of Truth' Is Upon Us: $1,400-Plus or Not? - 18th June 19
Exceptional Times for Gold Warrant Special Attention - 18th June 19
The Stock Market Has Gone Nowhere and Volume is Low. What’s Next - 18th June 19
Silver Long-Term Trend Analysis - 18th June 19
IBM - Watson Deep Learning - AI Stocks Investing - Video - 18th June 19
Investors are Confident, Bullish and Buying Stocks, but… - 18th June 19
Gold and Silver Reversals – Impossible Not to Notice - 18th June 19
S&P 500 Stuck at 2,900, Still No Clear Direction - 17th June 19
Is Boris set to be the next Conservation leader? - 17th June 19
Clock’s Ticking on Your Chance to Profit from the Yield Curve Inversion - 17th June 19
Stock Market Rally Faltering? - 17th June 19
Johnson Vs Gove Tory Leadership Contest Grudge Match Betfair Betting - 17th June 19
Nasdaq Stock Index Prediction System Is Telling Us A Very Different Story - 17th June 19
King Dollar Rides Higher Creating Pressures On Foreign Economies - 17th June 19
Land Rover Discovery Sport Tailgate Not Working Problems Fix (70) - 17th June 19
Stock Market Outlook: is the S&P today just like 2007 or 2016? - 17th June 19
US China War - Thucydides Trap and gold - 16th June 19
Gold Stocks Bull Upleg Mounting - 16th June 19
Gold Price Seasonal Trend Analysis - Video - 16th June 19
Fethiye Market Fruit, Veg, Spices and Turkish Delight Tourist Shopping - 16th June 19
US Dollar Gold Trend Analysis - 15th June 19
Gold Stocks “Launch” is in Line With Fundamentals - 15th June 19
The Rise of Silver and Major Economic Decline - 15th June 19
Fire Insurance Claims: What Are the Things a Fire Claim Adjuster Does? - 15th June 19
How To Find A Trustworthy Casino? - 15th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match - Video - 14th June 19
Gold and Silver, Precious Metals: T-Minus 3 Seconds To Liftoff! - 14th June 19
Silver Investing Trend Analysis - Video - 14th June 19
The American Dream Is Alive and Well - in China - 14th June 19
Keeping the Online Gaming Industry in Line - 14th June 19
How Acquisitions Affect Global Stocks - 14th June 19
Please Don’t Buy the Dip in Nvidia or Other Chip Stocks - 14th June 19
A Big Thing in Investor Education is Explainer Videos - 14th June 19
IRAN - The Next American War - 13th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match Contest - 13th June 19
Top Best VPN Services You Can Choose For Your iPhone - 13th June 19
Tory Leadership Contest Betting Markets Forecast - Betfair - 13th June 19
US Stock Market Setting Up A Pennant Formation - 13th June 19
Which Stocks Will Lead The Cannabis Rebound? - 13th June 19
The Privatization of US Indo-Pacific Vision - Project 2049, Armitage, Budget Ploys and Taiwan Nexus - 12th June 19
Gold Price Breaks to the Upside - 12th June 19
Top Publicly Traded Casino Company Stocks for 2019 - 12th June 19
Silver Investing Trend Analysis - 12th June 19
Why Blue-Chip Dividend Stocks Aren’t as Safe as You Think - 12th June 19
Technical Analysis Shows Aug/Sept Stock Market Top Pattern Should Form - 12th June 19
FTSE 100: A Top European Index - 12th June 19

Market Oracle FREE Newsletter

Gold Price Trend Forecast Summer 2019

Top Myths and Facts about ULIP Plans

Personal_Finance / Insurance Feb 08, 2019 - 05:38 PM GMT

By: Justin_Weinger

Personal_Finance

ULIPs (Unit Linked Insurance Plans) offer you the combination of both investment and insurance components in a single entity. However, there are a plethora of myths surrounding ULIPs products due to lack of knowledge and understanding of its features & benefits. Here’s a look into some of the common myths and their counterpart reality associated with ULIPs which will help you make informed decisions:


Myth 1: ULIP Plans are Expensive

Fact: There is a prevailing misconception among people that ULIPs are expensive. To understand this, you should be first of all aware of the basic structure of ULIP, wherein your premium is divided into 2 parts. The first part is invested in services like life insurance coverage, fund management, etc. and the second part is invested in the funds of your choice.

Effective 1st September 2010, IRDA (Insurance Regulatory and Development Authority) put a cap on charges (besides the life insurance cover charges) that a life insurance provider can charge on a ULIP at 2.25% if a policyholder stays in a ULIP for a period of more than 10 years.
Capping ULIPs simply means that the cost of buying ULIP via online mode is much lesser compared to before times.

Myth 2: ULIP Plans Offer Market-Linked Returns and Therefore, are Risky Instruments

Fact: The life insurance cover that you buy stays fixed in a ULIP. A typical ULIP will offer you multiple fund options. At the time of buying a ULIP, you can choose your own set of funds you want to invest in.

Depending on your risk appetite, you can opt for debt, equity, balanced funds or a mix of both the equity & debt funds. For instance, HDFC Life Click 2 Invest ULIP offers 8 fund choices to choose from. Besides that, you also have the option to switch your corpus between funds or to direct your future premiums to newly allocated funds. All these changes are possible through a single ULIP without investing in a second product.

Myth 3: ULIP Plans Don’t Yield Satisfactory (Good) Returns

Fact: The return in a ULIP plan is determined based on the fact what is the nature of the movement of underlying funds including debt, equity and your individual funds’ choice. A proper funds’ selection and sensible fund switching at the right time can help you gain maximum returns from these market-linked funds.

ULIPs prominently offer not only an investment opportunity to build funds, but also life cover. By focussing on this particular aspect of ULIP funds, you can conclude that the ULIP returns are quite competitive.

Myth 4: ULIP Exit Procedure is Not Easy Once Purchased

Fact: Before buying a ULIP plan, it’s important for you to understand that you should invest in one focus on medium to long term goals. This is because ULIP plans usually come with a lock-in period of 5 years after which you have the option to surrender your existing policy.

In case you want to make a complete withdrawal before the lock-in period, there won’t be any exit load or surrender charges and you will get your fund value. However, it’s not an encouraging idea to surrender your ULIP plan midway unless there is no alternative source of funds for you.

The structure of ULIP requires you to remain invested in it for long-term if you want capital appreciation and reap maximum returns from your investment. In fact, the power of compounding only helps you in the long run and that’s only possible if your financial goals are defined at the time of buying ULIP.

Myth 5: The Life Insurance Component of ULIP Covers Any Depreciation in the Market

Fact:  Market fluctuations don’t affect the life insurance component of a ULIP at all. In case of your unfortunate demise, your existing ULIP plan will either pay either your total fund value or the life cover (whichever is higher) to your nominee.

Myth 6: ULIP Plans Don’t Allow Surplus funds’ Investment

Fact: Your ULIP plan does give you an option to top-up it, above your existing premium amount, using any available surplus funds and avail of tax benefits. You have the freedom to pay the top-up premiums as many times as you want during the policy tenure.

Final Thought:

All in all, ULIP plans are the ideal investment tools to help you achieve your long-term financial goals as it serves as the best wealth creation solution over the long term. Besides the investment component, as a policyholder, you also get access to life insurance component, which means additional financial assistance and security for your loved ones in case you are no more.

By Justin Weinger

© 2018 Copyright Justin Weinger - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules