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How to select the right ULIP

Vishal 
on 28 January 2011

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ULIPs are the most miss sold products in the Personal Finance domain. ULIP plans are revolutions for those who are looking for insurance and assured return on their insurance investments. These insurance products along with assured tax returns are also linked with tax benefits. The assured return on insurance investments has impressed many investors.


In the conventional Insurance products, the insurance component takes edge over the saving component, but in ULIPs insurance cover is secondary focus, while focusing mainly on return pert of your investment. ULIP offers opportunity for investor to select a product which matches their risk profile. Depending upon the risk factor of the investor he can select any ULIP product.


ULIPs are more like Mutual Funds, in term of their functioning, payment of premium and declaration of units in terms of NAV.


Whenever you are going for ULIPs, you should be well informed about ULIPs. ULIPs are most evolved investment avenues, and thus making well informed decisions is the key if you want to invest in ULIPs.


Read following tips which can be informative for your ULIP investments.


1. Understand ing ULIPsIn market there is a wide range of ULIPs available and which makes ot difficult for the investor to choose correct ULIP.Before investing in any ULIP try to get as much as information on ULIPs. Be aware of what product you are choosing for your investment.


Understand all the terms and conditions clearly before investing in ULIPs. You should try to gather information on ULIPs from various source of information including web, and print media information from Insurance companies.


2. Focus on your need and risk profileChoose a plan which focuses on your need and risk. Risk profile should be deciding factor in choosing a ULIP. Depending upon your risk profile you should go for ULIPs option which suits you better.


3. Comparing ULIPs from various companies:All the insurance companies offer many ULIPs, and ULIPs varies on parameters like expenses,premium payouts and performance etc. ULIPs work on premium payments as opposed to sum assured in the case of conventional insurance products.Before investing in any ULIP you should compare it on the basis if performance of ULIP. You should evaluate ULIPs on the basis of what's performance of debt, equity and balanced schemes and performance of various portfolios. Expenses play a major role in ULIP so an assessment on this parameter is also necessary.Make some enquire about the top-up facility offered by ULIPs i.e. additional lump sum investments which can be made to enhance the policy's savings portion. This way policyholders will be able to increase the premium amounts, thereby providing presenting an opportunity to gainfully invest any surplus funds available.


4. Go for an experienced insurance advisorBefore doing any kind of major investments you should always select and financial advisor, who is having a through knowledge of insurance instruments. But make sure that the advisor who you are seeking is unbiased and independent; he should not be broker of some insurance company. You should also look for reviews of the financial advisor, from his previous clients and also check standards of his services.


It is very important that you should get a unbiased and independent advice on your ank kind of investments, so its always better to look for an advisor who asks for payments for his advice, because in that case, he will be working for your welfare not for the insurance company, whose products he will advice you. It is also very important that you should ask your advisor to provide you more services, rather than just filling and submitting the required forms.


About The Author:

Looking to advice on ULIPs log on to PersonalFN. PersonalFN provides Financial Planning,Investment Planning, Insurance planning and Mutual Fund Research and Recommendation services to investors, who are looking to invest in Mutual Funds in India. PersonalFN also provides Financial Planning Calculators and Wealth Tracker Software to track your investments.




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