Each investment instrument has a particular set of options and features to let you invest in specific goals. The Unit Linked Insurance Plans (ULIPs) are also the same. They can be a sound choice for certain investment goals, even though they are plagued by several wrong or faulty perceptions. So, what are the different aspects that affect investor perceptions of ULIP Plans? Read on to know!
#1 Returns from the ULIP investments
Your perception regarding the returns from ULIP Plans can range between good returns and not-so-good returns. But the ULIP offers enough flexibility for the investors to increase their returns.
As ULIPs are connected to the market, guaranteed returns aren’t ensured. However, if you can manage the investments with a proper and disciplined approach and leave enough time for money growth, then ULIPs can provide better returns.
Also, returns are determined by your capacity to invest in high-risk assets, such as equity funds. However, taking extra risk is not the sole factor in deriving high returns. Moreover, you’ll need to manage the investment risks to increase and stabilize the returns. According to financial experts, over forty percent of investors have seen their wealth increase with ULIPs.
#2 Risks involved in ULIP investments
Now, the general perception regarding ULIP investments is that they are high-risk choices. It can be because of the fact that there are lots of long-term safe investment choices available already. Thus, many advisors like positioning a ULIP Plan as an equity investment tool, which implies a high risk. But the reality is different!
ULIPs are well-suited for all types of risks. The truth is that ULIPs come with multiple asset choices for the investors, which include high-growth focused equity funds. However, in case you’re a safe investor or simply want to move past the volatile equity market, ULIPs have the choice of diversified liquid and debt funds.
Therefore, while the investment will stay market-linked, you will still manage to keep the fund growth less risky and less volatile.
#3 Charges involved in ULIPs
The price of investment also influences the decision of an investor. You would not want a policy that burns a hole in your pocket and comes with a wide range of associated charges. Traditionally, a ULIP Plan is seen as an expensive affair. Many people are under the impression that the insurance premium ranges from high to very high.
However, the scenario has changed completely today. As opposed to general belief, these plans are relatively easy on your pocket. In the past couple of years, the charges have gone down considerably. Also, fund management charges are less than 1.35%, as per the IRDAI regulations.
In fact, some of the present ULIP policies have no policy administration, premium allocation, and switching charges. You might even get the mortality charge back on surviving the policy term.
The bottom line
At the end of the day, ULIP Plan is a sound and cost-effective investment policy. So, now that your perceptions are reformed, start your ULIP investments.
