ULIP has been one of the popular instruments which provide dual benefits of investments
and insurance. The policyholder has the opportunity of investing in different funds to
increase their wealth and get life insurance cover for their loved ones. Usually, when you
invest in a ULIP plan, a fund manager overlooks the policy and makes decisions on your
behalf. However, you have the option of managing the fund by yourself. If you do opt to
manage the policy by yourself, here is how you can track the ULIP performance.
Table of Contents
Keep an eye on the market
How do stock market investors manage to stay in profit despite all the fluctuations? They
always follow the market movements. Staying up to date with the constant market
movement provides them with an opportunity to maximise their profits at the right
moment. Similarly, when you manage your ULIP policy, it is essential that you keep an eye
on how the market is, as it impacts your investment. This in turn will impact your returns as
well.
Switch the funds
In a ULIP, investments are made in two types of funds: equity and debt. In equity funds,
investment is made in stocks of companies that are market listed. They are high-risk, high-
return funds. In debt funds, investment is made in government funds and securities,
corporate funds, liquid and cash markets. They are low-risk, low-medium-return funds. One
of the ULIP benefits is that you can switch your investments between funds. If you have
invested more in equity than debt, you can reallocate more towards debt with the help of
switching. This would help you in getting steady returns without high risk factor. Similarly, if
your risk appetite is high, you can switch your investments to equity funds.
Select the correct funds
As mentioned above, your ULIP policy offers you investment in equity and debt funds.
Based on your risk appetite, you can opt for either fund. However, it is imperative for you to
know which fund would be most suitable. If you have a higher risk appetite and want to gain
great returns in a shorter duration, you can go for equity funds. They offer high returns;
however, the risk exposure of these funds is very high. This could impact your investment
and your returns.
Your other option is investing in a debt fund. If you have a low-risk appetite and want steady
returns for a long duration, debt funds are the best option. This fund has a low-risk factor,
which means less exposure to risk. This safeguards your investment and returns. You have
the option to invest in both the funds at the same time. This will ensure you get good
returns without much risk exposure. Do keep in mind to invest in funds that match your life
goals.
Complete the lock-in period
The ULIP plan has a lock-in period of 5 years. Most of the insurers require you to pay
premiums for the policy during this lock-in period. In the initial period of the premium
payment, your insurer will levy charges for the policy; these will be deducted from your
premium. Once you complete the lock-in period, you are eligible for partial withdrawals
from your funds. These withdrawals are done for immediate expenses or to fulfil life goals of
the policyholder.
However, it is always advised not to surrender your ULIP before the end of the lock-in
period. This is because if you surrender the policy before or during the lock-in period ends,
you will not get the sum assured or returns on your investment. Even if you pay premiums
on time and surrender it during lock-in period, you will not be able to access your funds
before the period ends. You will not be able to make partial withdrawal during the lock-in
period as well. Once the period ends, partial withdrawals are charged by the insurer. Also,
the amount withdrawn is restored to your sum assured after a certain period.
When you decide on managing your ULIP plan by yourself, these are a few things that can
help you track the performance of your ULIP efficiently. To know more about such factors
and other ULIP benefits, you can get in touch with your insurance advisor.
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