A unit-linked insurance plan, or ulip plan, is a combination of insurance and investing. It’s a type of plan that gives you life insurance security while also giving you the freedom to manage your money. It achieves the objectives of wealth building and life insurance. A ULIP is usually created by an investor who wants to protect its beneficiaries. The insurance company deducts a portion of your investment for life insurance. It invests it in a fund based on equity or debt, depending on your preference, that is tailored to your long-term goals, such as retirement planning, children’s schooling, or any other significant event.
Similar to mutual funds, the assets in a ULIP plan are managed to achieve a specific goal. The plan determines a net asset value, which is market-linked and appreciates as the value rises. When an investor buys units in a ULIP, they buy them alongside a group of other investors. Investors can purchase shares in a single strategy or diversify their portfolio across various market-linked Unit-linked Insurance Plans.
Why do we need term insurance?
- Financial security for your family: If you are the major breadwinner, purchasing a term plan will cover your family’s monthly financial needs while you are away.
- Secure your Assets: You may have taken out a loan for a school, a home, a personal loan, or a vehicle. In your absence, the repayment of these loans can put a financial strain on your family. The money from your term insurance policy pays off your debts and relieves your family of the financial stress.
- Lifestyle-related risks: The risk of having a lifestyle disease rises with age#. Some term insurance plans include critical illness coverage, which protects your family in the event of unforeseen events and throughout your life. The essential illness2 benefit protects you financially against various life-threatening illnesses, such as cancer and heart attack.
Term Insurance Features
You will better understand the meaning and benefits of a wealth insurance plan if you comprehend the features of a term plan. Term plans have several distinguishing characteristics, including the following:
- Affordability: Term insurance policies are among the most cost-effective types of life insurance. Term life insurance premiums are typically substantially lower than other life insurance policies. For a monthly cost of as little as 485*, you can acquire life insurance worth up to 1 crore.
- Entry age: You can purchase term plans at an early age, provided you are at least 18 years old. When you’re young, buying a term plan allows you to acquire a lot of coverage for a low price.
- Policy Term: Term insurance covers you for a set period, known as the policy term. Your nominee will get the cash insured in your insurance if something unpleasant happens during this time.
- If you pick whole life insurance, you can get a term insurance policy that starts at five years and lasts until your 99th birthday. You can choose the correct policy term for your needs based on how long your loved ones may require your financial assistance.