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6 Important Tips to Maximize Your Gains with ULIP Investments

Maximize your ULIP investment returns and achieve your financial goals with these six practical tips. Read to know the six important tips to maximize your investment gains.

  • 4,267 Views | Updated on: Jun 05, 2024

Simply investing your money in financial tools isn’t enough - understanding how to maximize your investment returns is the actual key. For example, the popularity of ULIP plans has climbed to unprecedented heights. ULIPs have become everyone’s favorite and a household name for a plan that comes with a mandated 5-year lock-in period that offers both investment and a life insurance plan.

The benefits of insurance and market-linked profits plus partial withdrawals are an amazing combination for an efficient financial plan. We will share all of the secrets and tips you need to know in order to make a significant capital gain on ULIP in this article.

Tips to Maximize Gains with ULIP Investments

Examining the Economic Scenario is Your Best Friend

This step works in combination with the switch option. You must be knowledgeable of the present economic atmosphere as well as the prediction for both national and worldwide markets in order to swap your finances effectively. Leading indicators, such as the price of crude oil and the increase in international political tension, are critical in predicting market performance and, as a result, the gain on ULIP.

Diversify Your Portfolio

Diversifying your portfolio is a crucial aspect of a smart investment strategy. It involves spreading your investment across a range of assets to reduce the risk of losses. A diversified portfolio helps protect you from market volatility and reduces the impact of any negative events that may affect specific sectors or industries.

Stay Aligned with Your Goals

Your income composition, appetite for risk, long-term financial goals, and investment objective must all be considered when choosing a policy. When picking a plan, keep your financial objectives in mind, whether they are definite events like a child’s wedding or more ambiguous ones like building money for the future. The ideal strategy aids you in achieving your objective and gets you there with the least amount of obstacles and the most gain on ULIP investments. To make your selection, look at the plan’s investment ratio in both equity and debt funds.

Look for Options that Allow You to Swap Plans for Free

ULIPs main goal is to invest your money in various asset classes in accordance with your investment objectives and risk tolerance. Your fund manager can offer advice on “moving funds” at this point, which refers to distributing an investment over various asset classes in order to diversify the portfolio. With this diversification, profits from one asset class are offset by losses from another. When selecting life insurance policies online, search for funds that provide a “free switch” a predetermined number of times per year, as most plans in India do. As long as the ULIP plan is still valid, this enables switching between debt and equity funds without incurring additional costs

Consider the Long Term

A life insurance plan’s fundamental tenet is that it provides coverage for life; hence it is based on a tenure of more than 10 or even 15 years. ULIPs, on the other hand, provide a market entry. Again, a longer investment horizon is ideal in this situation, as the potential risk of your investment equalises over time. This promotes saving and wealth-building because only after the 5-year lock-in period has passed are partial withdrawals permitted and because your investment is automatically maximised through compounded returns.

Analyze Your Risk Tolerance

The maxim “greater the risk, higher the profits” is frequently used in the investment world. However, not everyone enjoys taking big chances. Some investors are more concerned with regular profits and capital preservation. Your income determines how much risk you can accept. If your yearly income is expected to increase, you can tolerate risk and allocate cash appropriately. Investment products should accommodate investors’ various risk appetites. Due to this, ULIPs are among the best investment options you have, regardless of your level of risk tolerance. To achieve your life goals, you can invest in ULIPs using low-risk loan funds, balanced funds, or high-risk equity funds.

Unit-Linked Insurance Plan Benefits

The flexibility that ULIP provides investors is what gives it its benefits. Additionally, ULIP tax advantages increase its popularity with people seeking to cut their tax bills and build up a greater corpus for achieving their future goals, both short- and long-term. Continue reading to discover more benefits of ULIPs.

  • Several asset classes are available for investment. Additionally, ULIP offers flexibility so that you can choose the premium or the sum assured based on your needs. You can select a strategy that fits your financial objectives and risk tolerance.
  • The full duration of the policy, the charge structure, the investment value, and the anticipated return rate are all disclosed to you before you purchase a ULIP plan. So, you are aware of where your hard-earned money is going.
  • Partially withdrawing money from a ULIP plan is another attractive feature. If an emergency arises, you can choose to make a partial withdrawal (only after the first five years).
  • When you purchase a ULIP policy, you are encouraged to develop a regular savings habit because it aids in creating a corpus for future requirements. On the other side, there are investments that offer consistent returns, such as monthly income plans, which offer a monthly income with guaranteed returns.

Wrapping Up

Maximizing gain on ULIP is not as complex as it may appear. All you have to do is stay updated with market circumstances, align them with your financial goals, and research and make the best decision possible in order to benefit from long-term capital gain on ULIP. You can also calculate ULIP and then make the right investment.

    Key takeaways

  • 6 Tips to Maximize Gains with ULIP Investments
  • Examining The Economic Scenario is Your Best Friend
  • Diversify Your Portfolio Stay Aligned With Your Goals
  • Look for Options That Allow You to Swap Plans for Free
  • Consider the Long Term
  • Analyze Your Risk Tolerance

- 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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