Unit Linked Insurance Plan is a type of life insurance plan that lets you save your money and invest it in the market linked products along with the regular insurance coverage. But, there are several myths about life insurance products, especially ULIPs. In this article, we shall excavate the truth about the three most common myths about ULIPs.
Investing in ULIPs Is Risky
The most common myth about ULIPs is that investing in these insurance plans is risky because it invests only in equities. Whereas the fact is, ULIPs offer the option of different types of funds for investment such as equities, debts, or a combination of equity and debt. Bearing in mind the risk appetite and financial goal, one can select a suitable type of funds. Equities are aggressive or high-risk funds and are ideal for the people having high risk-hunger. For the people with a low-risk appetite, conservative funds are best suitable that invest money into debts.
Accident and Health Cover Is Not Provided in ULIPs
This is another myth among the people about ULIPs. A simple Unit Linked Insurance Plan offers both insurance and investment benefits to the life insured, but at the same time, it enables to purchase the add-ons or riders to the policy. There are several riders such as accidental death benefit, hospital cash benefit, waiver of premium, and so on which can be added to the original policy along with the little rise in premiums. Therefore, it is clear that you can choose a suitable rider without any doubt.
ULIPs Don’t Offer Adequate Returns
Again, a myth! Actually, the money is invested in different funds that offer a different amount at the end of the term. Also, switching between the funds is allowed during the policy tenure so that if one thinks that a particular fund may help to build a large corpus, he can switch between the funds. The growth of the fund depends on different factors, such as the type of fund and judicious switching. Another most important thing is, Unit Linked Insurance Plans are long-term investment plans and offer attractive returns only with disciplined investments. If someone expects a sizeable corpus in a short period, you will not meet your expectations.
To conclude, the three myths mentioned above possess no value, and you need to ignore them entirely! Make a wise decision by opting for a right Unit Linked Insurance Plan and be ready to gain a sizeable corpus at the end of the tenure.