3 Things To Know When Creating A Financial Plan

Unlike a pure insurance policy, a Unit Linked Insurance Plan (ULIP) gives investors the benefits of both insurance and investment under a single integrated plan. While it is extremely beneficial to fulfil both goals at once, there are a few things an investor must consider when selecting the plan that works best for them.

Here are some factors that might influence your decision:

1. Know your risk appetite: This investment risk of a ULIP is borne entirely by the policyholder and will need to be monitored actively. Thus, it’s important to determine your risk appetite and financial needs before selecting your plan. ULIPs come with a range of fund options to choose from depending on your propensity to take risks. Ranging between aggressive and conservative, ULIP options cater to a variety of appetites.
2. Costs involved in ULIPs: It’s important to pre-emptively determine what expenses are involved in the ULIP you select. Things to consider: administration charges (usually deducted on a monthly basis), mortality charges (a variable cost towards providing life insurance cover) and fund management charges (generally in the range of 0.5% to 2%).
3. ULIPs also offer fantastic tax savings on withdrawals that are unavailable to mutual fund investors. Withdrawals may occur on occasion of: a.) Death of the policyholder b.) Maturity of the policy c.) Partial withdrawal at the discretion of the policyholder.
4. Separate investments in life insurance and mutual funds would ideally help you enjoy good returns, assured protection and attractive tax savings. However, striking the right balance between the two is tough. That is why; investing in a ULIP plan can help you enjoy the benefits of both these products in one shot.

In the Unit linked life insurance product, the Investment Risk in investment portfolio is borne by the Policyholder.

To know more about term plan, term insurance, long term savings visit PNB MetLife website.