Top 5 Tips to Invest in ULIPs at Lower Cost
Unit Linked Investment Plans or ULIPs were the most wanted investment options before the year 2008. The sudden downfall in the financial market during that time has completely changed this picture. Currently, investing in mutual funds is more popular than investing in ULIPs. However, the financial market has stabilized in past one decade and today it is entirely safe to invest your hard earned money in ULIPs. Instead, you now can expect better returns from ULIP investment at lower costs than investing your money in mutual funds.
Mentioned below are top 5 tips to invest in ULIPs at lower cost:
- Purchase ULIP Online: It is suggested to purchase ULIPs online. This is because; there are various investment tools available online that keep the track of market trends and let you take the most informed financial decision. One more reason for preferring online purchase of ULIPs is you can avail the nil-premium allocation and charges of policy administration. These advantages are available online and significantly reduce the cost of ULIPs.
- Invest Your Money for Long Time: Same as mutual funds investments, the investment in ULIPs are also given for long term. You have to have patience while investing in a ULIP plan. Moreover, if you want to avail the benefits of good return you have to be in the game of ULIP investment for the longer run. The typical lock-in period in which ULIPs give the best returns in 12 to 15 years. Apart from this, you should prepare yourself to know and understand the market trends for both debt funds and equity funds. This will enable you to make a beneficial financial decision.
- Avail the Switching Facility of ULIP: ULIP is the only investment plan that gives you the facility of switching. This means you can switch your selected funds for free, however for a limited number of times only. For example, you can easily switch from a debt fund to equity fund. This gives an opportunity to minimize your risk and maximize the profit.
- Make Balance between Good Returns and Low-Cost Investment: It is always advised to not to get tempted by the low-cost investment by compromising in returns. The best investment plan or best financial strategy is to focus on both the investment amount and returns. However, ULIP provides you the balance between these two and hence is a key to make successful investments.
- Buy a High-Value Life Insurance: Since ULIP gives you the opportunity to avail both investment and insurance, so by choosing life insurance that provides 10 times more coverage than your insurance premium is suggested. Opting for this feature of ULIP gives you tax benefits as per the Section 80C of the Income Tax Act 1961. Under this tax saving plan, you can get the deduction of up to Rs. 1.5 Lakh.
By keeping these tips in mind, you can probably find the best low-cost ULIP investment. Another tip to get the most from ULIP is to start investing in it at lower age like in your 20s or 30s or as soon as you start earning. However, by suggesting ULIP investment, we do not want to say that you should invest big amount instead you can start with a smaller amount and even then you can reap the highest benefits. Apart from this, you can start investing in ULIPs even if you are 50 years old or more than that as you will not be in the loss as ULIPs give you the highest mortality charges.