Guide to Investing in ULIPS If You Are Risk Averse
Increasing family financial commitments and uncertainties in life will compel you to invest in financial products that provide multiple benefits. The financial objective will lean towards securing your family during unexpected scenarios, saving funds, and increasing your wealth for the future. Different products provide varied, flexible features that help you modify them for your benefit. The ULIP investment is one such product that provides the necessary financial benefits if you are risk-averse.
What is a ULIP Plan?
ULIP plan is a comprehensive life insurance product that provides a life cover to secure your family’s financial future in your absence and market-linked returns at maturity. It is a valuable financial product for people who are the sole earning members of the family who are risk-averse. The ULIP scheme has a five-year lock-in period, after which you can partially withdraw the funds.
How to Invest In ULIPs if You Are Risk Averse
Investing in the ULIP scheme can be beneficial if you utilise the flexible features of the unit-linked insurance plan. Here is a detail to help you better:
- Invest based on your risk appetite – Insurers provide varied fund options for you to invest in based on your risk appetite. For example, there are different fund options such as debt, balanced and equity for the low-risk, medium risk and high-risk investors. So, if you are risk-averse, you can invest in the debt fund investment. The financial securities in it will provide consistent returns at low risk.
- Choose the fund option based on affordability – While the fund option can be based on your risk appetite, it can also be based on your affordability. For example, the Tata AIA investment plan provides 11 different options. You can choose the option based on your affordability to stay invested in the long term. There are designated fund managers to help you decide the fund option based on your income, expenses and future financial commitments.
- Switch between the fund options – The unit-linked insurance policy allows you to switch between the fund options based on the changing economic conditions. For example, if you have invested in the balanced fund options and find that the investment value is reducing due to an extreme economic downturn, you can always switch to a debt fund.
It is a conservative option to stay invested in the financial market. Therefore, you must be aware of the prevailing market conditions that affect your fund option and take the necessary actions to switch between the options to protect your investment value. You can also let your fund manager take charge of your investment and make the changes whenever required.
- Choose the online investment platform – When you invest in the ULIP scheme using the online platform, you can compare different fund options and make the necessary changes at your convenience and cost-effectively. It is an effortless procedure. You can also utilise the online premium calculator to determine the sum assured and the affordable premium based on the policy tenure. Choose a longer policy tenure to accumulate a higher fund to increase your wealth. A long policy tenure can also correct the market conditions after temporary economic downturns.
Investing in the unit-linked insurance policy provides dual benefits, the life cover and the market-linked returns. The life cover will secure your family in case of your unexpected demise. The ULIP plan also allows you to invest in financial securities based on your risk appetite. So, if you are risk-averse, you can choose to invest in the debt market, be aware of the market conditions to switch between the options and most importantly, purchase and manage the account using the online platform to make the transactions simple and cost-effective.