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Understanding ULIPs and their Benefits

Understanding ULIPs and their Benefits
September 26, 2022

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

Unit-Linked Insurance Plans (ULIPs) serve as an investment-cum-insurance financial tool. They allow policyholders to grow their wealth over time through investments in equities and debts. Additionally, they provide life coverage for the policyholder. Let’s understand the benefits of ULIPs.

Benefits of ULIPs

  • Financial Independence

    ULIPs could help you build a corpus for your retirement. Investments you make today will enable you to remain financially independent even once you stop earning a regular income.

  • Life Coverage

    Crucially, ULIPs offer life coverage, providing your family with financial stability and security when they need it most.

  • Investment Flexibility

    When you invest in ULIPs, you choose how much of your money gets invested in various funds. You can opt to put all your money in equities or debts. Most people choose a mixed fund, which invests in a mix of debt and equity funds. As the policyholder, you decide how much of your money gets allocated to each type of fund. You can change your investment allocation based on market conditions to maximise your returns. HDFC Life’s Click 2 Wealth is one such ULIP plan which offers a choice of 11 funds and unlimited free switching option.

How to Choose the Ideal ULIP

Given the number of options available in the market, finding the ideal investment plan can seem overwhelming. Before you select a ULIP, you must consider:

  • Your Financial Goals

    Think about why you’re investing. Consider whether you want to invest for a few years or decades. If you’re investing for your retirement, you’ll likely want to invest in avenues that offer high rewards with minimal risk.

  • Your Risk Appetite

    Every investment tool comes with inherent risks. Decide how much risk you’re willing to take, and select a ULIP and fund options accordingly. An equity-heavy portfolio could work if you’re open to high risks. You may want to stick to debt funds if you are risk-averse. Ideally, find a balance of equity and debt instruments that provide the returns you’re looking for without exposing you to too much risk.

  • Maintenance Charges

    Insurance companies charge a maintenance fee that helps them manage your ULIP investment. You want to select a plan with competitive charges to make the most of your investment amount.

    Unit-Linked Insurance Plans provide decent returns for your long-term goals. Additionally, they provide several benefits, allowing you to make the most of your idle money while planning for the future.

ARN: ED/08/22/28597

The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year.

HDFC Life Click 2 Wealth (UIN:101L133V03) is a Unit Linked Non-Participating Life Insurance Plan.

Life Insurance Coverage is available in this product. For more details on risk factors, associated terms and conditions and exclusions please read sales brochure carefully before concluding a sale. Unit Linked Insurance products are different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. HDFC Life Insurance Company Limited is only the name of the Life Insurance Company and HDFC Life Click 2 Wealth is only the name of the unit linked insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. For more details on risk factors, associated terms and conditions and exclusions please read sales brochure carefully before concluding a sale. The various funds offered under this contact are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.