5 Parameters to Consider Before Buying a ULIP

Today, investment plans play a crucial role in financial planning for future security and to achieve all the dreams and goals. As people’s lives have become quite uncertain after the second wave of coronavirus pandemic hit in 2021, there has been a surge in buying investment plans for the security of your loved ones. With investing in a financial plan, one seeks to be protected from any financial emergencies that may leave the family and the insurer at risk. Moreover, attaining your dreams and goals with investment plans also seems possible. 

Unit Linked Insurance Plan, also known as the ULIP, is one of the ideal insurance cum investment plans for insurers. With ULIP, the insurer and his family do not have to worry about financial security. However, to enjoy all the benefits of ULIP, you as an investor will have to a pay certain amount of money to the insurance company, also known as a premium. A ULIP keeps a part of your premium for insurance and the other part of the premium is invested in the market towards shares, equity, bonds, etc., for the purpose of financial growth. Thus, the ULIP offers an investor the dual benefit of both investing his money and insurance. 

Let us now look at 5 parameters to keep in mind before investing in the ULIP plan. 

5 Parameters to Keep in Mind Before Buying a ULIP Financial Bandwidth of the Insurance Provider 

The first parameter that an investor should consider before investing in a ULIP is whether the insurance providing company has the bandwidth and the capability to provide you with the sum assured during the claim. This is a crucial point to check so that you do not have to face any stumbling block in the future or during a financial emergency. 

  1. Maximum Sum Assured 

Whenever you decide to invest in ULIP, make sure you go for the maximum sum assured in case of the unfortunate death of the investor. As a result, it will be beneficial to the investor’s family in his absence. 

  1. How Much Risk Can You Afford?

One part of the premium for the ULIP that you pay to the insurer gets invested in the market in the form of bonds, shares, equity etc. Many investors may trust a lot of insurers blindly as they promise the former for high returns. Instead of believing, assess how much risk can you afford on your own. All those who want to keep the risk factor subtle can go for debt funds. On the other hand, people who want to keep the risk factor high can go for equity bonds such as stocks, etc. 

  1. Charges 

In Unit Linked Investment Plan or ULIP, there are various charges such as mortality cost, rider charges, etc. Therefore, it is beneficial to have explicit knowledge about these charges in advance. 

  1. Performance of the Market 

It is essential to check the market performance before investing in a ULIP as the returns depend on the market performance. One should analyse the plan thoroughly before investing in it.

Which Company to Go For?

Having assessed the parameters before investing in a ULIP, it can be concluded that investing in a ULIP plan is ideal. Moreover, the ULIP is one of the ideal and top investment plans in India. As much as investing and insurance is essential, it is also crucial that one should choose a life insurance company that is top-rated and trustworthy with good results. 


 The premium paid in Unit Linked Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions.

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