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Need assistance in choosing the right insurance plan? Get a call from our Expert.

Need assistance in choosing the right insurance plan?Get a call from our Expert.

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TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in. T&C apply.

How Can You Choose a ULIP Plan Suitable to Your Portfolio?

ULIP combines the benefits of life coverage and market-linked returns in one financial product. The premium you pay towards the plans partially allocated to provide life coverage whilst the remaining amount is invested in funds of your choice. The choice of funds depends upon factors like your risk appetite and financial needs.
 

If you have a risky appetite, you can choose equity-based funds, whereas if you have a less-risk appetite, you can choose debt-based funds. You can also opt for hybrid funds that comprise equity-based and debt-based funds.
 

Selecting the right ULIP insurance plan is important, and there are some things that you must keep in mind before choosing a plan for yourself.
 

How to Select a Suitable ULIP Policy?
 

ULIP insurance plans have multiple benefits, and these are considered a good investment option provided that you select a plan accurately. In ULIPs, you must pay premiums like any other life insurance product. However, a part of the premium is allocated to providing life coverage while the remaining premium is invested in the market to get better returns.
 

ULIPs have dual benefits of providing financial protection to your family in case of your unfortunate demise, while it also provides an opportunity for you to earn through market-linked returns. The things to consider before you select a plan are mentioned below.
 

  1. Risk Appetite

    One of the top things you need to consider while choosing a ULIP policy is your risk-taking capacity. When you are young, your ability to take risks is more. However, the risk-taking capacity decreases when you have dependents. Age-related risks and illnesses also affect the risk-taking capacity of an individual. Therefore, it is essential to understand your risk profile before choosing a ULIP plan. Equity-based funds are suitable options for people who can take more risks for more returns.

    Insurers offer multiple funds to choose from, and you can choose the investment profile according to your ability to take risks. Before choosing a ULIP, the policyholder must check if the insurer allows you to switch funds in case of changes in the market. With this option, you can switch funds if the market conditions are unfavourable towards the funds you had chosen previously.

  2. Personal Investment Goals

    You need to determine your financial and life goals before making an investment decision. Life goals can include buying a house, marriage, child education, etc. So, it is important to understand and evaluate your goals before choosing a plan for yourself.

    A Unit Linked Insurance Plan has become one of the popular life insurance products due to its multiple benefits. It provides a financial safety net to your family in case of an unexpected event or death. Also, it provides you avenues where you can invest and create wealth through market-linked returns. Therefore, before choosing a plan, you need to make wise investment decisions and study your risk appetite and goals.
     
Important Parameters to Keep in Mind While Choosing a ULIP policy




Here are some things you need to consider while choosing a suitable ULIP for yourself.
 

  • Determine the risk: It is important to understand your capacity for taking risks. Therefore, it is advisable not to invest in a risky fund until you know that the returns from the funds are more. Also, make sure that your ULIP portfolio matches your risk profile.

  • Evaluate the life coverage: A part of the ULIP premium is allocated to providing death benefits to your family when you are not there. Therefore, the right ULIP plan will offer more death benefit that will provide financial assistance to your family in the event of your unexpected demise.

  • Analyze different plans: There are different plans available in the market. So it is essential to ensure that you choose the right plan as per your needs. We at Tata AIA offer you an online ULIP calculator so that you can calculate the premiums and coverage and determine the suitable plan according to your requirements.

  • Identify your investment objectives: Everyone has different goals in life, and the type of investment you choose also depends on these goals. So, it is better to determine your investment objectives and then choose a plan for yourself.

  • Tax* benefits: ULIPs also come with several tax* benefits. The amount you pay towards premium qualifies for tax* deduction under Section 80C of the Income Tax Act, 1961 if the annual premiums do not exceed 10% of the sum assured. The death benefits under the ULIPs are tax* exempt. Thus, benefits under ulip taxation are also an attractive feature while buying a ulip policy.

  • ULIP charges: The fund manager of your ULIP charges you under different categories like premium allocation, fund switching, policy administration, fund management, etc. The charges are reflected as a reduction in the number of units you hold in a fund. Therefore, you must know the quantum of charges to avoid unnecessary charges.
     
Conclusion
 

With the advancement of technology, selecting and buying the right ULIP plan has become simple. However, it would be wise to analyze different plans, understand your investment objectives, read the terms and conditions, and evaluate your risk appetite so that the plan aligns with your requirements. With the multitude of benefits, investing in ULIP plans is a good decision, but it should be done after creating a ULIPs portfolio strategy.
 

L&C/Advt/2022/Nov/2852

Get Flexibility to Choose from 10+ Fund Options with our ULIP

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Disclaimers

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
  • THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICY HOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.
  • Past performance is not indicative of future performance.
  • All investments made by the Company are subject to market risks. The Company does not guarantee any assured returns. The investment income and price may go down as well as up depending on several factors influencing the market.
  • Please make your own independent decision after consulting your financial or other professional advisor.