ULIP Myths You Should Ignore

We live in a world where financial devices abound. While this is a wonderful thing, it frequently leaves individuals perplexed – after all, picking the correct investment vehicle sets the tone for the future. This is especially true given the uncertain situations we face, such as the devastating Coronavirus epidemic, which has infected over 180 million people and killed nearly four million. Both protection and investment are critical in today's uncertain and fast-paced environment. ULIPs, or Unit Linked Insurance Plans, come into play in this situation. 

A ULIP, which combines insurance and investing, can help you and your family achieve your financial goals. With the outbreak of the pandemic, it is evident that nothing is more important than one's health and financial security. You must consider insurance, retirement, and the financial aspirations of your family, among other things. ULIPs come in handy in this situation because they combine the benefits of insurance and investment. These plans provide you with life insurance while also allowing you to participate in the stock market. While there are numerous benefits to ULIPs, there are some misconceptions about them. Don't worry; we're here to refute all of those misleading claims right now. Are you all set?

ULIP Myths You Should Ignore

Below are few ULIP myths you should ignore:

1. Ulips Are Only Suitable For High-risk Investors

Reality: Oh, this is yet another urban legend! ULIPs cater to a wide range of risk tolerances, and you may choose which funds you want to invest in. Examine your long-term objectives and choose between stock, debt, or a combination of the two. Some ULIPs allow policyholders to freely choose between numerous fund selections at any time. This, however, varies from plan to plan. Investors can also allocate future premiums among other ULIP funds. This provides much-needed versatility.

2. Long-term, ULIPs Do Not Give High Returns

Reality: ULIPs, as we all know, are market-linked plans depending on the asset class you select, which might be equities, debt, or a combination of the two. What's vital to keep in mind is that the fund you choose will have an impact on your wealth-building goals. As with any other financial instrument, the higher the risk, the higher the possible reward. If you do your research and choose your funds carefully, ULIPs can yield significant market returns if you stay invested for a long time. Furthermore, you will profit from the advantages of life insurance coverage.

3. You Can't Easily Get Out Of A ULIP plan

Reality: It's time to debunk yet another urban legend! When looking at long-term market-linked wealth development goals, ULIPs serve a valuable purpose, as we stated before. If you have certain life objectives in mind, such as funding your child's education, marriage, or home purchase, this is one of the best instruments for you to use. These policies have a five-year lock-in period after which you can choose to redeem them. However, if you decide to abandon the policy in the middle, it will not bode well, especially if you want to make a profit in the long run. As a result, it is advised that you keep your ULIP insurance until the conclusion of the policy term.

4. ULIP Life Insurance Is Subject To Market Changes

Reality: The majority of people are concerned about this! Because ULIPs are market-linked, they assume that any market highs or lows will affect your life insurance. The good news is that nothing of the sort will occur. Despite market volatility, ULIP’s life protection remains untouched. In the event of the policyholder's untimely death during the policy term, the higher the Sum Assured or the fund value is paid. The maturity benefit paid out in ULIPs is either the sum promised or the fund value, whichever is higher.

Conclusion

Unit Linked Insurance Plans (ULIPs) are a type of insurance that combines investing and insurance into one product. However, due to a lack of awareness of product characteristics and benefits, there are various myths around these items. We've debunked some of the most popular ULIP misconceptions here. We hope that this information will assist you in making more informed judgments.

Also read - Do ULIPs Allow Partial Withdrawal?