These days, the economy can toss out your financial plans overnight. The COVID pandemic back in 2019 was a testament to how your job, living situation, and life itself are unpredictable. It is important to protect the future of your loved ones because you never know how much time you have. It is also necessary to build multiple sources of income to tackle the economy’s volatility.
There are numerous means to grow your wealth and secure the future of those you love. Although, wouldn’t it be better, and easier if you could do both with a single investment plan?
That is the beauty of ULIPs. They allow you to secure your present and your family’s future with a single policy plan.
Investment planning with ULIPs
Life insurance plans are the surest way to financially secure your loved ones’ futures in the event of your demise. ULIPs are Unit Linked Insurance Plans. They allow you to build a financial safeguard for your beneficiaries while you earn from the investment in their future.
investment planning with ULIPs is easier than you may think. You will need to purchase a ULIP with a desired sum assured for a specified premium that will be valid during the policy tenure. In the event of your demise, the insurer will pay the sum assured to your beneficiaries.
Aside from the life insurance aspect, investment planning with ULIPs has another incredible benefit. It allows you to invest in the current unit-linked market and earn profits. Basically, you share your risk appetite with the insurer, and they will shortlist equity and debt funds.
Equity funds are risky instruments that are highly volatile, but the profit margins are higher. Debt funds, on the other hand, are risk-free investments that guarantee a steady stream of limited returns. You may choose one or the other based on your risk appetite. You can also mix it up to earn substantial profits from equity funds with some risks while mitigating the risks with debt funds for guaranteed returns.
Based on your selections, the insurance provider will invest your premiums regularly in the Unit-linked market. You can observe the market and determine whether you are making profits or losses. When you need cash, you can withdraw the profit from the market or wait it out for maximum benefits.
What is a ULIP calculator?
investment planning with ULIPs is quite beneficial, but without a clear understanding of the investment vs returns ratio, you may find yourself at a disadvantage. That is where the ULIP calculator comes to your rescue.
A ULIP calculator is a free online gadget that you can use on your insurer’s website or app. It takes into account important factors about your financial goals, current market situation, risk appetite, and personal details to devise a customised plan for you.
Here are the steps to utilise the ULIP calculator to determine the perfect ULIP investment plan for you:
- First, you must visit your insurance provider’s online website and click on the ULIP calculator.
- Next, you will need to input the amount that you want to earn. For instance, you can input 1 crore if that is the amount of money you need to meet your financial goals.
- Then, you must select the period within which you want to make the desired amount. Let’s assume you want to earn 1 crore profit from your investments within 10 years.
- Once you select the duration and financial aim, you will need to decide how you want to invest your money. You can take major risks in equity markets for higher returns or choose smaller returns with safe, risk-free market investments.
- You will have to select the percentage of your investments that you want to invest in equity markets. The converse of that will be invested in the debt, risk-free market. You can choose 0% to 100% in either or balance them out to complement each other, such that you do not incur losses.
- Finally, you will need to choose the expected return from each market instrument. For instance, if you invest 0% in equity and 100% in risk-free markets, you will need to choose your expected returns from the latter. However, if you chose 50-50 or 20-80% respectively, you need to also select how much return you expect from the market-linked instruments and how much from the risk-free instruments separately.
Once you make the above selections, the ULIP calculator will assess your financial goals, duration, risk appetite, and expected returns thoroughly. It will also use the market volatility and current rates to determine the amount that you need to invest annually. It will also show you the approximate amount of profit you will make from each instrument.
You can adjust the factors in the ULIP calculator to derive a suitable solution. You can then input your details and purchase the policy to secure your loved ones’ futures as well as earn more money.
