What is ULIP ?
When we talk about insurance as an investment option. ULIPs have an important role as many of the investor nowadays goes for this as a profitable avenue. ULIP is an abbreviation for Unit Linked Insurance Policy. A ULIP is a Life Insurance Policy which provides an arrangement of risk cover and investment. The dynamics of the capital market have a direct impact on the performance of the ULIPs. remember that in a unit linked insurance policy, the investment risk is generally borne by the investor/the holder of the policy.
Under this policy the insurer allocated the total premium into various units. You are also given the opportunity to chose the option of investment units. Most of the investors prefer to allocate them in financial instruments and assets. The number of units you choose on each option might differ from individual to individual. Some of you may choose to invest more on Real Estate while the rest prefer to invest more on Financial Instruments such as shares, debentures etc.
Likewise the insurer takes care to allocate a unit of the premium for insurance maintenance and the related expenses. You are also excused from paying income tax for the profits received from the investment. However this policy does not guarantee profits like the traditional plan and is therefore risky as far as returns are concerned. But the Possibility of making more profit is very high in this policy.
ULIPs fundamentally work like a Mutual Fund with a life cover thrown in. they invest the premium in market linked instruments like Stocks, Debentures, Corporate Bonds and Government Securities. Investments in ULIPs help to gain tax benefits under Section 80C. Depending upon the performance of the unit linked funds chosen, the policy holder may realize gains or losses on his/her investments. It should also be noted that the past performance of a fund are not necessarily indicative of the future returns of the fund
When we talk about insurance as an investment option. ULIPs have an important role as many of the investor nowadays goes for this as a profitable avenue. ULIP is an abbreviation for Unit Linked Insurance Policy. A ULIP is a Life Insurance Policy which provides an arrangement of risk cover and investment. The dynamics of the capital market have a direct impact on the performance of the ULIPs. remember that in a unit linked insurance policy, the investment risk is generally borne by the investor/the holder of the policy.
Under this policy the insurer allocated the total premium into various units. You are also given the opportunity to chose the option of investment units. Most of the investors prefer to allocate them in financial instruments and assets. The number of units you choose on each option might differ from individual to individual. Some of you may choose to invest more on Real Estate while the rest prefer to invest more on Financial Instruments such as shares, debentures etc.
Likewise the insurer takes care to allocate a unit of the premium for insurance maintenance and the related expenses. You are also excused from paying income tax for the profits received from the investment. However this policy does not guarantee profits like the traditional plan and is therefore risky as far as returns are concerned. But the Possibility of making more profit is very high in this policy.
ULIPs fundamentally work like a Mutual Fund with a life cover thrown in. they invest the premium in market linked instruments like Stocks, Debentures, Corporate Bonds and Government Securities. Investments in ULIPs help to gain tax benefits under Section 80C. Depending upon the performance of the unit linked funds chosen, the policy holder may realize gains or losses on his/her investments. It should also be noted that the past performance of a fund are not necessarily indicative of the future returns of the fund
1 comments:
Good Article. You can check Stocks in News Today
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