While there are various life insurance and investment products in the market, a Unit-Linked Insurance Plan or a ULIP carries an edge because it offers the dual benefit of life insurance protection and wealth accumulation. It ensures you achieve yourself and your family’s life goals both in your presence and absence – helping you strike the perfect balance between insurance and investment.
How does a ULIP work? As a ULIP is a mix of insurance and investment, it allocates the premiums you pay towards the plan in two avenues. A part of the premiums goes into securing the life insurance cover and necessary fund charges, while the rest goes into investing in equity, debt or hybrid funds. The performance of these funds over 10-25 years gives the investor increased returns. What does a ULIP offer? A ULIP offers the investor: 1. A guaranteed death benefit: As a part life insurance product, a ULIP gives the policyholder’s nominees (family members) of the plan a fixed and guaranteed monetary payout called the sum assured. This sum secures the family of the buyer in his/ her absence. 2. A maturity benefit: At the end of the ULIP plan, you get the returns (also called fund value) from the invested funds in case you survive the term. You can receive the maturity benefit as a one-time lump sum amount or in periodic monthly, quarterly, semi-annual and annual payouts. 3. Partial withdrawals: A ULIP comes with a mandatory lock-in period of five years, after which you can make partial withdrawals or choose to end the plan as per your convenience. However, it is wise to wait the entire term of the plan out as you receive higher returns and face lesser losses. How can Edelweiss Tokio Life’s Wealth Secure+ help you achieve your financial goals? The Edelweiss Tokio Life Wealth Secure+ is one such ULIP that gives you the complete flexibility to align your personal goals with your financial goals. With this Edelweiss Tokio Life plan, you get: 1. The choice to secure yourself, your partner and your children with the Individual Life Cover, Joint Life cover or Child Cover option. You can make these choices as and when the need for them arises and make top-up additions to your ULIP. 2. The freedom to kick-start your wealth-creation journey with affordable premium prices as less as Rs. 1,000 a month. 3. Whole life insurance coverage even up to 100 years of age! 4. A guaranteed death benefit that includes:
However, this is applicable only for the Individual or Joint Cover option. For the Child Cover option, the nominee will only receive the base sum assured and 105% of the total premiums paid until the death of the policyholder. 5. A maturity benefit: Here, you receive the entire fund value (between interest rates of 4% - 8%) calculated at the prevailing net asset value (NAV) on the expiry date of the ULIP plan. You can either receive this in a lump sum or monthly, quarterly, semi-annual or annual installments for a maximum period of 5 years. 6. Additions such as:
7. The freedom to choose from seven diverse fund options:
You can get us to manage your funds through the Life stage and Duration-based strategy or choose to manage them yourself through the Self-managed strategy option. 8. The liberty to:
9. Tax benefits on the premiums paid and the maturity benefit received at the end of the term under the relevant sections of the Income Tax Act, 1961. To conclude: A ULIP is perfect for ticking off two goals at the same time. It gives you enough flexibility to meet milestones such as marriage, education, retirement, and so on. Moreover, it is no longer an expensive product after the Insurance Regulatory and Development Authority of India passed rules to bring down its charges. However, you have to be in it for the long haul and be open to financial commitment to gain better returns.
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People usually prefer investments in mutual funds India for varied reasons. These may include meeting financial goals or acting on the basis of their individual risk appetite. A mutual fund investment should however be chosen carefully since you should zero in on the right reason first, i.e. risk appetite and financial goals. Choosing between the twain may appear a little difficult and rightly so! However, both are entwined in ways that you have not imagined yet.
You cannot always choose from mutual funds India on the basis of their earlier performance and other factors. You also have to look at fees and added charges, downside risks, consistency of overall performance and similar factors. A mutual fund is a suitable investment option for planning out financial goals. This instrument for investment will be sufficient for catering to a bigger spectrum of risk tolerance or appetite. It is vital to keep risks in mind while investing in mutual funds since returns from the investment are also related to risk factors. You should ideally select funds which have higher risk appetite in case capital appreciation is your investment goal. Simultaneously, you may consider taking more risks if you look for a longer investment tenure. Even if you seek a longer investment duration with sizable capital appreciation but do not have ample appetite for volatility, you will find suitable options pertaining to mutual funds as well. Investors have varying risk tolerance even in case of varying objectives. The first thing to do is identifying your financial goals and objectives. You should first zero in on the investment objectives, i.e. long term capital gains or current earnings. Work out what you will use the returns for, i.e. paying for higher education, funding your retirement or buying a house/car down the line. You should also consider personal tolerance for risk thereafter. Are you okay with sudden market fluctuations and changes in the value of your portfolio? Are you looking for something conservative or can you take some market risks? You will have to balance your need for returns with the risks involved. The desired time horizon or tenure should be carefully considered. How long do you wish to continue your investment? Do you foresee any concerns relating to liquidity in the near future? A horizon of at least 5 years is suitable since there are added costs of mutual funds and these may initially take away a chunk of your returns or earnings. Investors may invest to earn better returns for the shorter duration as compared to fixed deposits. They may plan long term goals for investments with mutual funds. These include the education and weddings of children, buying a home and also retirement. The risk tolerance may vary from one investor to another. Some investors have a higher appetite for risk while planning for retirement although risk tolerance may be low while planning for higher education costs of children. Hence, do the math and operate accordingly. |
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