HOW TO SELECT A ULIP

Unit-linked insurance plans, or ULIPs, are financial instruments that combine insurance with investment.Used intelligently, ULIPs give you the best of both worlds.

The annual premium that you pay has two functions: a small portion takes care of the insurance component, while the other larger chunk is diverted into investments.

Through its dual functions, the ULIP allows the policyholder to not only provide for the beneficiaries in the event of death, but also save for future financial goals.

Insurers offer a wide range of policies to suit different individuals, each of whom will vary in terms of financial needs, investment goals and risk appetite.

Insurers offer a wide range of policies to suit different individuals, each of whom will vary in terms of financial needs, investment goals and risk appetite.

1.Selecting the right ULIP based on risk appetite
a. Equity-based ULIPs

If generating high returns is a priority, one should opt for an aggressive equity-based ULIP. The risk here is medium to high depending on the market outlook, but it gives the best returns on investment.

b. Debt-based ULIPs

Individuals with a lower risk appetite should go in for debt-based ULIPs. These invest in relatively safer instruments such as corporate bonds, government securities and other fixed-income instruments