How to maximise your gains from investments in ULIP


Any life insurance products, whether ULIPs or endowment plans help to make you a disciplined investor. These long-term plans help to stay invested and grow your money, thereby build a significant corpus in the future. Along with the investment part, it also brings assurance of life coverage. Let’s delve more into maximising your returns with ULIPs.

ULIPs are the market-linked product that helps to build significant wealth in future. When an investor chooses to invest in a ULIP plan, a part of the premium amount is used for insurance, and the remaining part is invested in different investment instruments, including equities and debts.

ULIP plans usually have a lock-in period of 5 years. During this period, the insured regularly pays the premium towards the amount drawn for providing insurance. Other than the above benefits, ULIPs also have tax benefits which makes it even more popular among youngsters.

Maximising return with ULIPs

While most of the investors invest in ULIPs on the pursuit of tax benefits, not many know about the ways to maximise the returns. An investor can increase or decrease his/her return depending upon the risk appetite. They can diversify their portfolio switch the funds according to the market conditions and the changing individual needs.

Switching Funds

This feature helps to magnify your returns on ULIPs. During the bullish market, one can switch over to equity funds and reap the benefits while during the bearish market, one can benefit from investing in debt funds or balanced funds. Few policy providers charge a nominal fee to switch the funds or else it comes free of cost.

Economic Scenario Analysis

Understanding the market conditions is a crucial step to maximise your returns. Knowing when to switch your funds play an important role in the process of maximising your returns. Few indicators like prices of crude oil, political turmoil internationally or nationally affect the market conditions majorly.

Life goals

Your risk appetite is built basis your life goals, and knowing your goals at every stage of life is paramount. For instance, if you would want to invest in your child’s education, you would have to start investing in equities from the start until at least the mid tenure of the investment.

Regular payment of Premiums

ULIP plans come with few charges such as management charges, administrative charges, surrender charges, mortality charges. A part of these charges can be paid back as a part of loyalty additions if the premiums are regularly paid. Moreover, regular payment of premiums inculcates a disciplined investment approach.

Insurance is the primary focus.

Remember, the primary component of ULIPs is insurance which should be the primary focus. So before choosing your plan, you should be aware that your coverage is adequate and it would compensate the income loss in case an unexpected event happens.

In a nutshell, to enjoy maximum benefits, an individual should start investing at a younger age. At this age, an individual has a higher risk appetite and can invest in funds with higher returns. As the person grows old, the risk appetite becomes moderate to low, and a person can shift the funds accordingly.