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Kotak e-Term Plan is a pure term plan that provides a high level of protection to your loved ones in your absence.
The Kotak Health Shield Plan helps secure your finances in times of sudden medical expenses related to illness such as Cardiac, Liver, Neuro and Cancer (all early and major stages of illness /conditions of Cancer); along with offering protection for Personal Accident - in case of accidental death or disability.
Kotak Lifetime Income Plan gives you the assurance of your income continuing throughout your life and in your absence throughout the lifetime of your spouse!
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The dual benefit of investment and insurance makes Unit Linked Insurance Plans (ULIPs) a popular choice in India.
But it is often the case that anything popular gets surrounded by myths and misconceptions. Especially in India, where financial awareness is a little low, it is not surprising to see people believing such misconceptions related to ULIP investments.
To help you make the right decision,
Until 2008, the premium allocation charges in ULIPs were high. But IRDA has now capped the fund management charges to 1.35% of the fund value, due to which ULIP investments have become highly cost-efficient.
Moreover, as insurance providers are governed by the IRDA, one can rest assured that the insurance provider will promptly inform about all the charges to ensure complete transparency.
One of the USPs of ULIPs is their flexibility. It allows the investors to choose funds as per their risk profile. You can choose between equity, debt, and balanced funds as per your investment objective and risk appetite.
The belief that all ULIP investments are volatile is wrong as investors always have the option to choose a fund, they are most comfortable with.
It is wrong to invest in ULIPs to generate very high returns within a short duration. While equity funds in the ULIP can deliver excellent returns, they also come with the highest level of risk.
The returns ultimately depend on the market conditions, especially if you’ve chosen an equity fund for your ULIP. Also, ULIPs are long-term products, and one should remain invested for 10-15 years for maximum returns.
With ULIPs, investors have the option to switch between various fund options offered by the insurer. Contrary to popular belief, switching between funds in ULIPs is not expensive. Most insurers offer 5-10 free switches without any charges.
Some of the ULIPs have no upper limit on fund switches. Even if you’ve used the limited free switches offered by the insurer, the cost of the switch is not more than Rs. 50 to Rs. 500.
The premiums that you pay towards ULIP are divided into two components- investment and insurance. Only the investment component fluctuates based on the market conditions if you’ve chosen an equity or balanced fund.
The insurance component is separate and has no relation with the market conditions. In case if the market falls, the life cover will remain the same.
The combination of insurance and investment makes ULIPs an ideal choice for achieving long-term financial objectives while also offering financial stability to the dependents in case of your demise.
Now that these common myths are busted, invest in ULIP with a reputed insurer and add more stability to your finances.
- A Consumer Education Initiative series by Kotak Life
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