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How much wealth can I create from a ULIP in 10 years?

Once considered an odd member of the investment sector, Unit Linked Insurance Plans better known as ULIP plans, have caught the attention of Indian investors in the past couple of years. Irrespective of what age group you fall under, if you are keen on financially securing your future, then you can consider opting for an online ULIP plan. A ULIP comes with a 5 year lock in period. ULIPs offer pay-outs in case of surrender, maturity, and an assured sum in case of the untimely demise of the insured. They also offer partial withdrawals once the investment matures.

If you are investing in a ULIP plan it is better that you keep a long term investment horizon. That’s because ULIPs are market linked schemes. Historically, investments made in equity markets have benefited those who remained invested for the long run. So if you are investing in ULIPs, make sure that you remain invested for the long run.

How much wealth can I create with ULIP in 10 years?

If you really want gain decent ULIP returns, you may have to have a long term investment horizon of at least 10 years. If you want to achieve long term capital gains, you may choose to remain invested for more than 10 years as well. That’s because historically, ULIPs have generated returns worth 10 to 12 percent over the long term. The kind of returns that a ULIP plan offers these days is way better than other conservative as well as non-traditional financial schemes. Apparently, a ULIP plan holds the potential to better returns as compared to government schemes like Public Provident Fund (PPF) and National Savings Certificate (NSC). The problem with short term investments is that inflation can impact them. However, if you invest in a good ULIP plan and remain invested for 10 years or above, then your investments stand a chance of overcoming inflation as well.

Switch according to your convenience

Another advantage ULIPs offer to investors is that they switch between funds. Thus, one can make the most out of their investments if they successfully exercise the switching of funds depending on market movements over the period of 10 years. When you make the initial investment in a ULIP plan, you have the option of choosing from debt, equity or balanced funds for investment. However, you do not have to necessarily invest in all three types of funds and can invest depending on your risk tolerance. Also, during the tenure, if your financial goals happen to change, you can even rebalance your portfolio to make sure that your investments are in sync with your financial goals. Another reason for an investor to consider switching is their ULIP performance. If the investor isn’t happy with the kind of returns the ULIP is churning, they can switch funds depending on the performance of ULIP funds. ULIPs have multiple switching options like Systematic Transfer Option (STO), Return Protector Option (RTO), Auto Fund Rebalancing (AFR) and Safety Switch Option (SSO). Investors can choose between either of these switching options depending on their convenience.

To add to this, ULIPs are flexible in nature too. An investor can choose the number of years they wish to remain invested in ULIPs. They can also choose the amount that they wish to continue investing for that many years.

Because ULIPs offer so many benefits, this is what makes them a promising investment option. However, if you are someone who needs further assistance in making an investment decision, feel free to consult a financial advisor.

 

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