ULIP checklist:Things you should care before buying any ULIP

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Things you should know before choosing any ULIP plans.

If you have understood the concept of ULIP, as how it works and what are its benefits and how the charges are deducted.

Following are the things which one should consider before buying any ULIP plan.

*Do you really need it?

Most of the ULIP (and insurance plans) are sold as an obligation to your relationship. Don’t try to be emotional and check if you really need this? If yes then check how much insurance cover you need.

*Who is Insurer?

This is the most (read twice) important aspect.

Money invested in ULIP is eligible for tax deduction but at the same you can not under any circumstances withdraw the money, this is one of the reasons why you care about insurers. Now days many new players are entering Indian Insurance market so check the credibility of Insurer (Local as well as global partner).

It is always advisable to go for the Life Insurance Corporation of India as it is government backed however there is no harm in going for private insurer like ICICI prudential, Bajaj Allianz,HDFC standard life insurance and many other private insurer who have proved their worth in the Indian Insurance market.

Second thing you should check is the track record of the ULIP plans offered by that Insurer, if the plan is new check for the return of few of the existing ULIP plan of that insurer.

You can also compare the ULIP of different insurers.

*Charge structure.

ULIP plans are famous for the charges it deducts.

You should understand clearly that out of your every 100 rupee how much is going to be invested for you, in ULIP terms you should know what is the Allocation charge, not only for the first year but also for each subsequent years. Normally all ULIP plans charges heavily for first year and gradually it reduces in the subsequent years.

Other charges like mortality, fund management, policy administration are highly regulated by IRDA and most of the insurer charges same here but you need to consider these charges well as ultimately this is going to be deducted from your investment.

*Number of Switches and number of funds.

One should also look for the number of free switches offered in ULIP plan, with stock market is one of the most unpredictable place, Number of free switches helps you to move your fund from high risk fund to low risk fund depending on your risk taking capacity. For the same thing number of fund also is very important.

*Partial withdrawal facility.

Many ULIP policies allow partial withdrawal.

Check that plan you are choosing gives partial withdrawal facility and what are its restrictions.

This facility helps you to off load part of your investment if you are in need of money.

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