One of the factors to determine the best life insurance policy or investment plan is flexibility. When you invest in flexible avenues, you can have more control over your deposited funds. When it comes to investments, a unit-linked insurance plan (ULIP plan) offers high flexibility.
What Is Meant By Flexibility in Investment Instruments?
Freedom to Switch Between Asset Classes and Assets: This helps you choose from various investment options like bonds, real estate, debt and equity based on their inherent risks and benefits. Plus you can switch between these asset classes.
Freedom to Choose Any Investment Frequency: Under this flexibility, you can pay a one-time lump sum amount or invest periodically (annually, bi-annually, quarterly or monthly) based on your convenience. Salaried individuals may like monthly payments. On the other hand, someone who has received a one-time bounty might prefer investing it in one go as a lump sum payment.
Freedom to Withdraw Money Anytime: This refers to the ability to access the whole or part of your investment when you need the same even if that’s before the maturity period of the plan.
Freedom to Choose Your Preferred Investment Term: Based on your financial goals, you can choose an investment term between 5 and 30 years. A flexible investment instrument offers this freedom.
In What Ways Does a ULIP Plan Offer Flexibility?
In Terms of Choosing Funds: A ULIP plan allows you to choose from a wide range of funds from balanced to liquid funds and from equities to debt funds and more. You can make a choice based on your risk appetite, preference and investment goals.
In Terms of Fund Allocation: You don’t have to place all the funds in the same asset category when you invest in a unit-linked insurance plan. You can allocate your funds between various asset classes. An example is dedicating 40% to equities and the rest to debt funds if you don’t have a very high risk appetite.
In Terms of Picking the Premium Payment Term: The frequency of premium payments depends highly on the way an investor earns. If you have consistent earnings, you may like to invest regularly (quarterly, monthly, etc.). If you have particular seasons that allow you to make a one-time payment or annual payments, you may do that. A ULIP plan offers complete flexibility in terms of premium payment frequency.
In Terms of Benefits to be Received: Benefits available in a unit-linked insurance plan are categorised as death benefits and maturity benefits. You can even get the facility to receive these benefits in instalments.
Flexibility and Systematic Withdrawal: A unit-linked insurance plan allows you to make systematic withdrawals from it while following a few safety regulations. For instance, you can withdraw only after turning 18 or once the minimum lock-in period is over.
A ULIP plan is quite user-friendly due to the flexible options it offers. However, remember that your investments are subject to market changes and therefore, go through the plan’s documents properly before you start to invest.
