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Life insurance is one of the most commonly used instruments by the common man for protection against the uncertainties of life. And one of the most popular forms of insurance is the ULIP, or the Unit-linked Insurance Policy. The popularity of ULIPs could be attributed to the fact that they have been used not just for the protection of the interests of the Insured in an uncertain future, but also as an instrument of investment and growth in the financial markets.
But how could you make the most of your ULIP? Is this financial instrument serving your purpose properly, or have you been using it with the right objectives in mind? Here is a glance at how you could leverage the potential of life insurance to draw even more benefits for you and your loved ones.
As a first step, ensure that you invest in the right kind of insurance Policy for what it promises to offer you. Unit-linked < ahref="https://www.easypolicy.com/life-insurance/term-insurance"> life insurance is one that is designed for protection and for the long term, to empower those who may not be among the savviest in the financial markets. However, it is important to recognise that they are for the long Term – much of their costs are recovered in the form of fees in the initial periods. If your idea was to make quick returns on your investments, you should be looking at other financial products than the unit-linked ones.
One of the most impressive factors associated with these forms of life insurance is that you would have the freedom to switch between funds without incurring charges for the first few times. If you find that you do not get enough returns from your initial funds, or if you are not comfortable with the stocks on account of their perceived risks, you could switch for free between funds a few times. This is an option that many investors are not aware of.
It is a statutory requirement that the insurance provider gives what is called a 'looking period' when you, as an investor, start off on an investment or an insurance policy. With ULIPs too, you have the freedom of the looking period, where you could opt to cancel the policy without incurring charges, as long as such cancellation is within the stipulated period of the purchase. Usually, this period could last between 15 and 30 days of the activation of your life insurance policy.
The best way to make the most of your ULIP is to be aware of your rights as an investor, and to make use of the provisions that are in-built into the life insurance policy for your protection.