When you invest in the markets, what is your primary goal? To obtain good returns, isn’t it? But going hand-in-hand with that goal is another important objective - to obtain safe returns too. And a Unit Linked Insurance Plan (ULIP) can help you do both. A ULIP is a kind of life insurance plan that gives you the advantage of both life insurance and investment.
To understand how a ULIP policy can help you obtain market linked returns, let’s first take a look at how ULIPs work.
How do ULIPs work?
The way ULIPs work may seem a bit complex at first, but if you look closer, it’s really very simple. ULIPs offer the double advantage of both life insurance and investment. The life insurance component works just like a regular life insurance plan. The policyholder gets a life cover that is valid through the tenure of the ULIP policy. In case of their demise during the policy term, the death benefits assured under the plan are paid out to the nominee. In case they survive the policy term, they will receive the appropriate maturity benefits specified under the plan.
As for the investment component, ULIPs essentially allow policyholders to invest in various kinds of funds such as equity funds, debt funds, or both. So, ULIP returns are market-linked. Over the course of the investment period, the ULIP NAV - or the net asset value - will fluctuate based on the market movement. And if the policyholder remains invested for the entire period, the returns at the end of the policy term are paid out to them when the policy matures.
Now, how do you make sure that you maximise the market linked returns from your ULIPs? You can simply make use of the many different ULIP features that are in place to help you get returns based on your risk profile. Check them out below.
