Have you just started your ULIP investment and aren’t sure how to manage it well? It is common for first-time investors as well as policyholders to be in a dilemma regarding their ULIP policies. As such a plan has a unique investment component, it is vital to make the most out of it to gain good returns. So, today, allow us to take you through the five key pointers that explain how you can manage your Unit-Linked Insurance Plan to get the best possible returns.
- Review Your Life Goals
Every investor has a certain goal in mind while investing his or her money in a financial instrument. It could be purchasing a house, your child’s education, your retirement corpus, etc. If you do not already have such a goal in mind, it is advised to review it first. By completing this step, you can now align your investment based on such life goals. Usually, most individuals shall opt for equity investment funds in the start to earn good ULIP plan returns. As they come closer to accomplishing it, they switch to safer options like debt funds.
- Understand Your Risk Appetite
Not all individuals want risk exposure while investing in market-linked instruments. Similarly, as a ULIP policyholder, you may want to play safe for various reasons. Thus, it is crucial to understand how much risk you can take and choose the fund type accordingly. Apart from equity funds, you can also pick debt funds to earn stable returns. But if you prefer high risk and want to take advantage of the market movements, then you can surely opt for equity funds. However, this completely depends on your risk appetite.
- Make Use of Fund Switching Facility
Unit-Linked Insurance Plans offer you the lucrative feature of fund switching where you can change the fund type depending on your goals. In case you want to earn higher returns and are willing to take the risk, you can switch to equity funds without much hassle. Insurers provide you with a limited number of free switches in ULIP. On utilising this, you must pay a fee to switch your investment fund. With this facility, you can easily manage your insurance plan to earn good returns from the investment. The online ULIP calculator can greatly help you estimate the returns you can get in the future.
- Evaluate the ULIP Charges
There are several ULIP charges associated with the plan, which gets deducted from the premium. Some of them are fund management fee, premium allocation charges, fund switching charges, mortality fees, etc. Many of these expenses related to fund switching facility or partial withdrawal depend on how often you use these features. On estimating such charges, you can learn how much of the premium is being invested and how you can cut down on some expenses.
- Study the Market Movement
As you have invested in a market-linked instrument, it is crucial to keep an eye on the market fluctuations. Soon, you shall start understanding the various jargons and how investors predict market movements by analysis. Doing this can help you secure your investment from any volatility and park the corpus in safer options. In this way, you can manage your ULIP investment with some research and market evaluation.
- Use Online Calculators
You shall find several online ULIP return calculators available on the internet to estimate your long-term returns. These tools are free to use and aren’t very complicated. Thus, you can plan your investment returns with such a calculator to meet your life goals. It can easily help you manage your ULIP policy without much trouble.
With the above-mentioned pointers, you can understand how to manage your ULIP policy to gain lucrative returns. But it is recommended to keep tabs on any news related to the market and be on track.