Wondering what a ULIP policy is? A unit-linked insurance plan is an insurance-cum-investment instrument. The premium payment made towards it is split into 2 components. One is for life coverage and the other is for investing in money market tools. Therefore, with a ULIP, you get insurance and can also accumulate wealth considerably to meet long-term goals.

What Are ULIPs?

Let's learn what a ULIP plan is. It is an investment avenue divided into 2 parts. One goes into paying the premium against which the life insurance is received. The other goes into investing in debt, equity or balanced (combination of debt funds and equities) funds to gain returns.

Based on your long-term financial goal, you can reduce or increase the ratio of your investment in favour of your fund portfolio or insurance cover. Either way, you can receive financial benefits.

Who Should Buy ULIPs?

One who wants to get protection against eventualities and also earn returns to act as savings for the future can invest in ULIPs. One who has long-term needs must accumulate wealth to finance them.

If you have just begun your career and have fewer financial responsibilities and liabilities, invest aggressively in equities. They have a higher risk than debt funds, and therefore, have the chance to offer higher returns. In the mid-career, you can switch to balanced funds that balance the risk posed by equities by investing in debt funds as and when required. As you approach retirement, you can minimise your risk by switching to debt funds. When you consider investing in a unit-linked insurance plan, remember that you can buy a ULIP online. 

Goals That Can Be Fulfiled With ULIPs

Identify your long-term financial requirements and estimate the amount needed to meet them after adjusting for inflation. If you are not sure how much you need to invest, you can speak to the insurer's representative about the same. 

The minimum sum assured usually must be 10 times the premium. However, if you want to fund a lifetime goal, a cover of 15-20 times the annual premium can be beneficial. Here are 5 goals that a ULIP can help you achieve:

• International Travel: After you start a job, you can start investing and plan to have your first international travel within 5 years. This is the lock-in period of a unit-linked insurance policy.
• Buying a Home: Once you get married and plan to have kids, you can use ULIP returns to buy a home.
• Child Education: You can even use the returns from the ULIP plan to fund your child's higher studies.
• Child's Marriage: ULIP returns can also be helpful to finance the major expenses of your child's marriage.
• Retirement Planning: Finally, you can use the returns to meet your expenses after retirement to spend the golden years of your life without financial worries.

Now that you know the meaning of ULIP and how it can help you achieve long-term goals, consider choosing the best ULIP plan in India to start your investment journey.