ULIP offers a combination of the insurance and investment to the policyholder.
ULIP stands for unit linked insurance plans. ULIP is a combination of insurance and investment. Here policyholder can pay a premium monthly or annually. A small amount of the premium goes to secure life insurance and rest of the money is invested just like a mutual fund does. Policyholder goes on investing through the term of the policy – 5,10 or 15 years and accumulates the units. ULIP offers investors options that invest in equity and debt. An aggressive investor can pick equity oriented fund option whereas a conservative one can go with debt option. “If you have a long term ULIP, go for equity oriented fund option – which is called a growth option,” says Deepak Yohannan, CEO of myinsuranceclub.com
He further points out that the recently launched ULIP are better than the older ULIP due to lower charges. One can pick and choose the low cost ULIP. While traditional insurance plans offer 4% to 6% returns, ULIP can offer you double digit returns if you are invested in equity funds, says Deepak Yohannan.