July 21, 2024


Phenomenal Business

 Plan your Retirement with a ULIP Plan!

We all thrive our best to secure our present and future. We invest and save while getting accustomed to a particular lifestyle. It is easy to maintain a good quality of life when you are getting a monthly paycheck. However, it is important to have alternative sources of income from your savings and investments to lead a good life after retiring. When you retire, you stop receiving your source of income regularly, like you used to. 

When you are drafting a retirement plan, you need to take into consideration the inflation along with the likely hood of healthcare expenses that usually come with age. A good retirement plan ensures you live your older years in peace and financial sufficiency. There are several products out there that work specifically towards building a retirement corpus. Smart investors prefer products where you can diversify your allocation and get high returns like a Unit Linked Insurance Plan (ULIP).

Understanding ULIP

The meaning of ULIP is quite simple. It is a two-in-one product that provides life insurance and returns on investment. When you purchase a ULIP, the premiums that you pay for it are partly used towards providing a life cover and partly invested in funds of your choice. Here, you get to choose your fund allocation based on your risk appetite. If within the tenure of your policy, you lose your life, the nominee will receive the sum assured or maturity amount, whichever is higher. This ensures that, in your absence, your family has a financial cushion to rely on. If you survive your policy duration, you receive a maturity amount, which includes your investments, and the returns earned on them. 

Features of ULIP that make it a perfect retirement plan

Once you understand the meaning of ULIP, it is important to know what separates it from other investments. The features mentioned below reflect why ULIP would be the perfect investment plan to achieve your desired retired fund:

  • It offers high returns
    When you are making an investment, the first thing that you wonder about is the interest that you will receive on it. When compared to traditional investments like Fixed Deposits (FDs), pension plans, or most endowment plans, you will find that a ULIP easily provides higher returns. This is because most ULIP investors prefer to put their money in equity-based funds for most of the tenure of the policy. You can use tools like a ULIP return calculator online to get an estimate of the returns you will get on the funds you are investing in. Also, the ULIP portfolio is managed by fund managers whose job is basically to generate high returns for their clients.
  • It has an allocation for every investor
    When you are looking for an investment for your retirement based on your current lifestyle, existing investments, and financial goals, your risk appetite will vary. You may look for a safer investment, and in that case, you can choose debt allocation. Debt funds offer low returns, but the risk is also low since the fund is invested in government and corporate bonds. If you have a high-risk appetite, you can invest in equity funds. They have high risk but usually offer high returns. If you are looking for a 50:50 risk to reward ratio, a balanced fund would be your ideal choice. They invest half of your money in debt funds and the remaining in equity funds. No matter what your risk appetite is, there are funds available accordingly in a ULIP. It offers a wide range of options to all its policyholders. Use a ULIP return calculator and plan your investment accordingly.
  • It offers flexibility in investment
    Usually, when you invest your money in any investment, you cannot switch your fund allocation. If you have invested in an FD, the money will stay in it till the tenure ends. If you have invested in a stock, even if you are not making enough money, you will have the option to either sell in loss or hold on to it. Here is where ULIP proves to be a unique choice. When you invest in a ULIP, you can switch your fund allocation from debt to equity and vice versa anytime you want. Since ULIPs are directly linked to the market, the choice of switching your allocation will help you make the most of the market volatility. The flexibility to move your money anytime you want is a rare and beneficial feature for any long-term investment. 

To live a relaxed life after you retire, it is important to choose your investments now carefully. ULIP is an ideal investment as it provides great returns in the long haul, along with protecting your loved ones with its life insurance component.