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ULIP Investment Strategy: Top Tips to Improve Your ULIP Gains

To maximize your returns on the investment in ULIP funds, you must follow specific tips. As part of a ULIP investment strategy, here are some useful tips.

  • 5,439 Views | Updated on: Jan 11, 2024

With the rising inflation, adopting a modern investment strategy is essential. This helps you keep up with the market and ensures that your financial future is stable and secure. Unit Linked Insurance Plans, popularly known as ULIPs, are among today’s most purchased modern insurance plans. The reason behind this popularity is the dual benefit of insurance and investment that ULIPs offers to the policyholder in a single policy. This unique combination helps the policyholder enjoy the safety of life insurance while gaining profit on investment in different ULIP funds. However, since the investment part of the ULIP policies is market-linked, it is crucial to follow an investment strategy to avoid making minimal gains or incurring losses.

ULIP Investment Strategy

The ULIP policies have two components embedded together in one policy. On the one hand, the life insurance components offer protection from any uncertain incident. In contrast, the investment component helps you make money to tackle the inflation in the longer term allowing you to fulfill your financial goals. But to maximize your returns on the investment in ULIP funds, you must follow specific tips. Therefore, as part of a ULIP investment strategy, here is some information related to different aspects of the ULIP investment that will help you get financially stronger over time.

Top Tips to Improve Your ULIP Gains

Fund Switching

As we all know, market performance changes over time; thus, as an investor, you must be well aware of the market trends. ULIPs offer a unique feature that allows you to choose and switch between funds as required. Generally, the ULIP policies allow some accessible fund switches allocated to the policyholder at the time of policy induction. However, once you have exhausted your free limits, you must pay a nominal charge to switch between funds. Therefore, switching between the ULIP funds based on market trends ensures that your return on ULIP investment is multiplied. Consequently, you talk to your insurance agent or read more about fund switching before opting for a ULIP policy.

Economic Scenario Analysis

It is essential to evaluate the current economic scenario that involves both the market and your financial situation. This step works in sync with the fund switching. As an investor, you must be aware of the current economic environment, the forecast, and expert recommendations of both global and national markets.

Key market indicators like crude oil prices, international relations, socio-economic scenarios, national schemes, national politics, national economic performance, etc., must be closely watched, as they play a vital role in the performance of markets. This may directly impact your ULIP investment.

In addition, an analysis of your present financial situation will also help you decide your risk-taking capabilities and which funds to choose. So, ensuring that you are well aware of the current market-related economic news and trends along with proper evaluation of your current financial status can help you in a wise investment of your ULIP funds in suitable market-linked securities.

Ensure Timely and Regular Payment of Premiums

Timely payment of premiums not only helps you in maintaining a good habit but also you in other ways. So, when you opt for a ULIP policy, certain charges are involved at policy induction, like administration charges, management charges, mortality charges, etc. However, when a policyholder pays the premium timely and regularly, some of these charges are paid back as a loyalty bonus. Additionally, by ensuring a timely payment of premium, you will generate compounding interest on your investment in the long run.

For example, if you pay the sum of the whole premium(s) at the beginning of the new policy year, say ₹50,000 Per Annum, then you will earn more interest on the total sum which is now your whole corpus + ₹50,000 compared to paying it later in the year.

Understand the Importance of Insurance

Generally, when people talk about the management and optimization of ULIPs, they mainly focus on the investment component of the plan. However, giving equal attention and priority to the other component, life insurance, is essential. You must also have a decent sum assured in the insurance part of ULIP plans. This will ensure that you are prepared for any uncertainties and that your loved ones are financially stable in case of your absence.


If you keep the ULIP investment strategy in mind and optimize your ULIP policy promptly, surely the return will multiply. First, however, you must ensure that your funds are not invested just in market-linked securities and are proportionally distributed among all the high, medium, and low-risk ULIP funds to balance each other out.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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