5 Common Myths About ULIPs that needs to bust.

The misconceptions surrounding ULIPs are nothing but obstacles in the way of a good investment decision. If you study carefully about the benefits and features of the policy, you will see how profitable they are and how it helps you achieve your medium- and long-term goals.

Let’s see the hidden fact behind these common myths:

1. ULIPs are expensive

Not many people know that every time you deposit a premium, it is not only used to invest in the funds of your choice but also to provide you with a life insurance cover that will help you financially in case of your untimely death. Provides security. You can also buy a ULIP policy online to keep your cost down, it is much cheaper as compared to offline.

2. ULIPs are risky as they are linked to market returns

Some insurance companies also allow you to switch between funds or redirect your future premiums to a new fund without buying a new product. This convenience of switching between funds makes ULIPs better than monthly income schemes, where your money is invested only in low-risk securities.

3. ULIPs do not give good return on investment

The returns of a ULIP policy are determined by the performance of the asset class – debt, equity or both. With the right asset allocation and switching funds at the right time, you can get the most out of the market.

Moreover, ULIPs not only give you an opportunity to grow your wealth and build a corpus of funds, but they also secure your investments along with life cover.

4. If the market falls, your life cover is reduced

Just because your ULIP policy is linked to the equity market, it does not mean that your life insurance is also at risk. Even if the market falls, your life insurance is not affected. If anything happens to you, your ULIP plan will pay the policy beneficiary the fund value or life cover whichever is higher.

5. You cannot invest surplus funds in ULIPs

The fact is that if you have surplus funds, you can top-up your existing ULIP policy. You can invest it over and above the existing premium and still you will get tax benefits as you would get in case of regular premium. You get the option to pay the top-up premium multiple times during the policy tenure.

There are many reputed life insurance companies that offer competitive ULIP policies. All you have to do is make the right investment decision using online tools, such as premium calculators and comparison tools.