Types of Unit Linked Insurance Plans(ULIP's) in India

• Reduce taxable income by up to Rs. 1,50,000 deduction under section 80C**
• Convenient payment options - annual, half-yearly, quarterly or monthly premium payments
• Do more with plans that offer pure protection, retirement planning and investment options

Unit Linked Insurance Plan (ULIP) is a type of insurance where you can enjoy the benefit of being provided a cover as well see your investment grow over a period of time. A part of the premium paid by you is utilised in different investment tools while the rest of the balance is kept as part of your insurance coverage.

Types of funds in ULIPs

• Bond funds- As the name suggests, your money will be invested in bonds like corporate bonds, government bonds, fixed income bonds, etc. These funds are medium risk in nature and the returns are low level to medium level.
• Equity funds- These funds are also known as growth funds. In these fund, your money will be invested in shares/stocks of a company. Your fund manager will research and look for the best stock to invest your money in. You can also choose to invest your savings in a stock as per the company’s market capitalisation. Based on the market value of different stocks there are various funds such as large cap, mid cap, and micro-cap funds.
• Cash funds- If you don’t want to take too much of a risk, then you can invest your money in a cash fund. In this, your savings are directed towards money market instruments such as cash deposit, bank accounts, and market funds, etc.
• Balanced funds- This fund is a mix of both debts and equity. A part of your investment is allocated to equities and other high-risk instruments while the rest is directed towards fixed interest tools which are low-risk in nature.

ULIPs based on long-term investment

Purchasing a ULIP keeping in mind your long-term goals can be very helpful in many ways. The reasons how this plan can be a great investment tool are given below.

• The building of a corpus of funds- Investing your savings in a ULIP fulfills two purposes. Firstly, it allows your money to grow over a period of time and secondly it provides you with a protective cover. This allows you to save time as your money is managed by an insurer who ensures that not only is your and your family’s future secured but you also get to enjoy the profit as and when your savings get maximised.
• Children’s education- It is important that your children are provided with the best quality of education and their future should not suffer in any manner if you are not there tomorrow. Investing in a ULIP allows you to take care of your children’s education. Not only can a ULIP help you fund your kid’s education but also ensures that their dream of studying further does not take a backseat in case you are not around.

ULIP for the creation of wealth

ULIP is a brilliant tool to avail if you plan to create wealth for yourself. The ways through which a ULIP can you in creating wealth are given below.

• Regular Premium/Single Premium- Your capacity to pay your premiums can vary from another individual and hence you can choose your mode of premium payment. In a single premium, you pay the premium amount at one go when you are purchasing a ULIP for yourself. A regular premium allows you to pay your premiums over a set period of time, based on your capabilities. You can choose to pay your premium in a yearly mode, half-yearly mode, quarterly mode or monthly mode.
• Non-life staged/life-staged - Your appetite for risks may reduce as you grow older. These plans invest your money as per your risk appetite. Your money is invested in equity and debts in different proportions depending on your need and financial capabilities.
• Non-guaranteed/guaranteed- ULIPs offer varying degree of long-term benefits. A guaranteed ULIP generally aims to protect your capital and hence the returns are on the lower side. A non-guaranteed ULIP will invest your money in different investment tools depending on the risk factors they provide. The latter gives you the option of deciding at what time and in what proportion you would like to invest your savings.
• ULIPs for medical requirements- You can never predict accidents or any disease that can hit you. Hence, there are types of plans that allow you to build a corpus so that you can be financially prepared in case of any medical emergency. These plans allow you to partially withdraw a certain sum of money that allows you to clear your immediate expenses.
• ULIPs for retirement planning- You would want a regular flow of income even after you have retired. ULIPs are great tools which ensure that you do not have to worry financially even after you have stopped working. These plans give out regular payouts which in turn allow you to lead a standard life. A certain of amount of money gets credited to your account which helps you take care of your financial requirements.

Hence, ULIPs are brilliant insurance products which not only provide you cover but also allow your savings to get maximised over a period of time. You can buy a ULIP to satisfy your various requirements. Such plans not only help you in ensuring that you are able to provide quality education to your children but also help you in building a corpus so that you can lead a secure and relaxed life, especially post-retirement. A ULIP is a great tool for those who want a protective cover as well as maximise their savings. You can also choose the funds in which you would like to invest your money keeping in mind your future requirements and financial abilities.