Unit Linked Insurance Plans, or ULIPs, have emerged as one of the most popular financial instruments in recent times. They are essentially life insurance policies that also provide the benefits of investment to policyholders. With your money invested in market-linked securities, you can get decent returns on your ULIP investment if you survive the policy term.
If you invest in a ULIP plan, you can browse across multiple insurance companies and choose the best policy as per your requirements. For example, you can opt for the Tata AIA ULIP Policy, as it offers 11 funds to choose from.
But before you invest your money in a ULIP Insurance plan, you must know about the myths attached with ULIPs. We have tried to debunk some common ULIP myths so that you can make a well-informed decision.
5 ULIP Myths You Need to Stop Believing
Here is the list of myths:
- ULIP plans are too expensive
Contrary to popular belief, ULIP plans are not that expensive. They allow you to reap the dual rewards of insurance and investment. So, a part of the premium that you pay towards a ULIP insurance policy is used to provide you with a life cover, and the other part is invested in market-linked securities.
Thus, considering the benefits that they provide, ULIPs are very cost-effective investment products. Moreover, some insurance companies allow you to invest in ULIPs for a very low amount every month. For example, you can start investing in a Tata AIA ULIP Policy for as low as ₹1,000 per month.
- ULIPs are only for high-risk investors
Again, this is a common myth attached with ULIPs. Many people believe that they are only for high-risk investors. However, what you need to understand is that ULIPs can cater to investors with varying risk appetites. They allow you to select funds as per your risk appetite and invest accordingly. For example, you can invest in equity funds, debt funds, or a combination of both.
- ULIPs are not beneficial in the long run
As you know, ULIP plans provide you with the dual benefits of insurance and investment. Your money is invested in market-linked securities, and therefore, you can get high returns on your ULIP investments in the long run. However, it depends upon the performance of the funds chosen by you. Thus, it is crucial to invest your money in the right combination of funds. Apart from this, you also get the benefits of life insurance coverage by investing in a ULIP plan.
- There is no way to exit a ULIP plan
As we have discussed, ULIPs can be one of the best tools to achieve your long-term investment goals. For example, you can invest in a Tata AIA ULIP Policy to create a corpus for your child’s education, retirement, etc. However, if you wish to exit your ULIP investments, you can do so anytime after the completion of the lock-in period of five years. But we always recommend staying invested in a ULIP policy till the end of its term for best results.
- You cannot switch between the funds once you’ve purchased a ULIP policy
It’s a well-known ULIP policy fact that most insurance companies allow free switches between funds. For example, with a Tata AIA ULIP Policy, you can switch between your investments anytime during the policy term. This can help you gain maximum returns from your ULIP investments.
It is very crucial to equip yourself with these ULIP policy facts before you start searching for the best ULIP plan in the market. Not only for ULIPs, but you should verify the facts from authentic sources before investing in any financial instrument.