How to invest in Equity through ULIPs?
Let’s introduce you to Madhav. He has just quit his first job, and he has moved on to a better position in a bigger company. And of course, he has earned a 30% hike in his salary. Madhav now wants to put this extra money to good use. He wants to invest it. But he also wants a life insurance cover.
So, to find out more about how to cover both these goals, Madhav did a lot of research. And he found the answer in ULIPs. They offer both investing and insurance benefits. And based on the investor’s preference, they support investing in equity, debt, and other assets.
Let’s quickly take a look at what a ULIP is exactly.
What is a ULIP?
The term ULIP stands for Unit Linked Insurance Plan. It is an investment option that combines the aspects of both life insurance and investment. Confused? Don’t worry, here’s a brief explanation of the concept of ULIP.Basically, to invest in a ULIP, policyholders are required to pay premiums periodically. This is just like any other insurance plan. These premiums are used to provide the policyholder with a life cover, and are also invested in funds of the ULIP holder’s choice.
If the ULIP holder survives till the end of the investment term, they get to enjoy the returns provided by the ULIP’s fund investments. On the other hand, if the ULIP holder faces an untimely death during the plan’s tenure, the insurance portion of the ULIP would kick in and provide the beneficiaries with a death benefit. That’s not all. The beneficiaries would also receive the returns that the ULIP generated through the fund investments. Sounds like a win-win situation, doesn’t it?
Another major advantage of a Unit Linked Insurance Plans is the choice of funds they offer. You can choose from a wide variety of funds like equity funds, debt funds, or a mix of both
How to invest in equity through ULIPs?
Investing in equity is one of the ways people choose for long-term wealth creation. That said, how do you go about doing that through ULIPs? That’s exactly what we’re going to be looking at in this segment. Here’s a brief overview of the process that you would have to follow.
- Firstly, you would need to visit your insurance service provider’s website.
- Look for the ULIP section and choose any one of the products that you’re interested in.
- Before you finalize a plan, ensure that you read through the brochure and other related documents and compare them with the other plans.
- Once you’ve picked a ULIP, you can choose to invest in it online from the comfort of your own home.
- All you need to do is provide a few personal details such as your name, age, gender, email ID, and your phone number.
- Once you’ve provided your personal details, you would be required to enter the plan details like the amount of premium that you wish to pay, the frequency of payment, and the policy term, among others.
- In addition to the above mentioned details, you might also be requested to choose the type of funds that you would like to invest in. Since you’re interested in ULIP equity investments, you would have to go with equity funds.
- In some ULIPs, like the ABSLI Wealth Assure Plus, you’re also given the option to manually choose and customize the fund allocation to multiple funds. This allows you to split your funds between various funds of your choice. For instance, you could choose to invest all of your premium in equity funds or split them between different funds at a ratio of your choice.
- After selecting all the relevant options, you would receive a quote displaying the amount of premium that you need to pay. This will vary according to the premium payment frequency you choose.
- The next and the final step in the process is to make the first ever premium payment for the ULIP.
The whole idea of the process mentioned above is to only give you an overview of what might be in store. It may vary slightly depending on the type of service provider that you opt for. Alternatively, if you prefer to make your ULIP equity investment offline, you could always visit the nearest branch of your service provider and get in touch with a relationship manager.
Conclusion
ULIP equity investments invest the premiums that you pay in the equity markets, which can be volatile at times. And so, it is important to know and understand the risks before you actually invest your money. Staying invested in a Unit Linked Insurance Plan for the long-term is one of the best ways to ride out volatility and increase the possibility of steady returns in the future. Now that you know how to invest in equity through ULIPs, you can go ahead and start your wealth creation journey by making an informed choice.
Disclaimer
ABSLI Wealth Assure Plus Plan (UIN: 109L120V02) is a non-participating unit linked life insurance plan.
ADV/5/21-22/110
The linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender/withdraw the monies invested in Linked Insurance Products completely or partially till the end of the fifth year from inception. Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of the investment fund and factors’ influencing the capital market and the insured is responsible for his or her decision. Aditya Birla Sun Life Insurance Company Limited is only the name of the Insurance Company and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document. The various funds offered under this contract are the names of the funds and do not any way indicate the quality of these plans, their future prospects and returns. The Past performance of the Unit linked fund(s) of the company is not necessarily indicative of the future performance of any of these Unit linked fund(s).
