The essentials of zeroing in on an investment plan with a focus on ULIPs

Rohini, the elder of the two, was known for her financial wisdom. Sara, on the other hand, was a bit sceptical about investments. One day, Rohini decided it was time to enlighten Sara about the essentials of zeroing in on an investment plan, with a particular focus on unit-linked insurance plans (ULIPs).

“Hey Sara,” Rohini began, “Have you ever thought about investing your money wisely for long-term financial growth?”

Sara shrugged, “I don’t know, Rohini. Investing sounds complicated. I’m not sure where to start.”

Rohini smiled, realising she had an opportunity to share her financial knowledge. “Let me tell you about ULIPs, Sara. They’re like a two-in-one deal, offering both insurance and investment benefits. It’s an excellent way to secure your future while growing your wealth.”

Intrigued, Sara asked, “But why ULIPs? What makes them stand out?”

Rohini explained, “ULIPs allow you to invest in a variety of funds based on your risk appetite. Plus, they provide life cover, ensuring financial security for your loved ones. Now, before you dive in, there are top factors you need to consider.”

Sara was all ears as Rohini listed the factors – 

Financial goals

Define your short-term and long-term financial goals.

Think of your financial goals as destinations on a roadmap. Short-term goals could be the cosy bed-and-breakfast you want to visit soon, while long-term goals might resemble the dreamy beach house you’re eyeing for retirement. Defining these goals not only gives your investment plan direction but also helps set the timeline and risk level for your journey.

Risk tolerance

Assess how much risk you are willing to take.

Imagine investing is a roller coaster ride—some love the thrill of loops and twists, while others prefer a scenic train journey. Assessing your risk tolerance is like deciding which ride suits you best. If you can stomach market ups and downs without losing sleep, you might lean towards riskier, potentially higher-reward investments. But if you prefer a smoother financial journey, a more conservative approach might be your ticket.


Understand the charges associated with ULIPs.

Going through the charges in a ULIP is like reading the fine print in a contract. Allocation charges, fund management fees, and policy administration costs are the backstage crew that may sneakily nibble away at your returns. Knowing these charges is like having a flashlight in the dark—you can navigate the investment landscape more confidently.

Fund options

Choose funds that align with your investment objectives.

Picture ULIP funds as characters in a play, each with its role and personality. Choosing the right funds is like casting the best actors for a blockbuster. Align your fund choices with your investment objectives, blending different “characters” to create a well-balanced and engaging investment portfolio.

Lock-in period

Be aware of the lock-in period before you can make partial withdrawals.

Consider the lock-in period as the waiting time for your investment to bloom. Just like a fruit needs time to ripen, your ULIP requires a certain timeframe before you can pluck partial withdrawals. Being aware of this period prevents impulsive decisions and ensures you let your investment harvest fully.


Opt for plans that allow you to switch between funds.

Life is full of surprises, and so is the financial market. Opting for a ULIP that allows you to switch between funds is like having a wardrobe full of outfits—you can adapt to different occasions. It gives you the flexibility to tweak your investment strategy as life unfolds, ensuring your financial style remains in vogue.

Premium payment term

Decide on a premium payment term that suits your financial capacity.

Choosing the premium payment term is like deciding the frequency of your favourite treat. Some prefer the indulgence of a one-time premium, while others savour the taste with regular payments. Deciding on the term that aligns with your financial capacity ensures that your investment journey is not just sweet but sustainable.

Performance track record

Research the historical performance of the ULIP fund options.

Reviewing the historical performance of ULIP funds is akin to reading reviews before choosing a restaurant. Past performances are like customer testimonials—they give you a sense of what to expect. While not a crystal ball, a consistent track record can provide confidence that the fund manager knows their culinary, or in this case, financial, craft.

Top-up option

Check if the plan allows additional investments.

Imagine your investment as a garden and a top-up option as the ability to plant new flowers whenever you like. Checking if your ULIP allows additional investments is like ensuring your garden can always bloom with new opportunities, especially when you have surplus seeds to sow.

Policy term

Choose a policy term that aligns with your financial goals.

Choosing the policy term is like deciding how long you want to nurture your investment garden. Whether you’re planting seasonal flowers or perennial trees, aligning the term with your financial goals ensures that your garden flourishes and blossoms when you need it the most.

Mortality charges

Understand how mortality charges impact your premium.

Mortality charges in a ULIP are like the life insurance premium—a protective shield for your financial garden. Understanding how these fees impact your premium is akin to knowing the cost of the security guard watching over your investment, making sure it thrives despite unforeseen storms.

Rider options

Explore additional riders for enhanced coverage.

Think of riders as the extra toppings on your favourite pizza. Exploring additional riders for enhanced coverage is like adding more flavours to your financial plan. Whether it’s critical illness or accidental death coverage, these riders spice up your financial protection, ensuring your investment journey is not just safe but also flavorful.

Tax benefits

Take advantage of the tax benefits associated with ULIPs.

Tax benefits in ULIPs are like finding hidden treasures on your investment path. Taking advantage of these benefits is akin to using a treasure map—you go through the financial vertical, and at the end, there is a pot of tax savings gold waiting for you.

Online access

Opt for plans that offer convenient online access for monitoring.

In the age of smartphones and instant updates, having online access to your ULIP is like having a live broadcast of your investment journey. Opting for plans with convenient online access is akin to having a front-row seat—you can monitor, analyse, and make decisions with the ease of streaming your favourite show, ensuring your financial narrative stays engaging and under your control.

Claim settlement ratio

Look for insurers with a high claim settlement ratio.

The claim settlement ratio is like a character reference for an insurance company. High claim settlement ratios are like having trustworthy allies in your financial journey. Choosing insurers with a solid track record ensures that when the curtain falls on your investment story, the ending is smooth and satisfying.

As Rohini shared these insights, Sara felt more confident about entering investments. She realised that ULIPs offered a unique combination of security and growth.

Towards the end, Rohini said, “Remember, Sara, investing in ULIPs is like planting a tree. It takes time to grow, but the fruits it bears will be worth the wait.”

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