If you have decided to invest in a unit-linked insurance plan (ULIP), then it is a step in the right direction. Now, before you go ahead, talk to an insurer, and sign the dotted line, there are a few things you need to remember. All these factors will help you better assess and understand the investment. So, read on to understand better.
The credibility of the insurance company
The credibility of the insurance company has a major role to play in how well your fund does and the returns you earn from it. Moreover, the ULIPs also have an insurance component. So, it is important to assess the claim settlement ratio of the insurer to know the chances of your family getting the money on time. Thus, when you invest in Kotak e-Invest Plan, you are sure about getting the returns and the payouts on time.
The objective of investing in a ULIP
ULIPs are typically meant to fulfil your long-term goals. However, whether that long-term means ten or fifteen years depends on your investment objective. For instance, say your ULIP fund earned you ₹1000 in five years. But the same one can provide you with returns of ₹4000 in fifteen years. But if you have a goal that must be met in five years, then you will not extend the plan to ten more years.
Know about the risk factor associated
When you invest in Kotak e-Invest Plan, ask the fund manager or the company representative to explain the funds and their associated risks. You might not need to manage your funds actively, but you should clearly know what you are getting into.
Basically, it will be a mix of the three funds – equity, income, and debt funds. Equity funds deal mainly with equities or stocks. Then, income funds are about offering regular returns to you. Finally, debt funds are into corporate bonds, government securities, etc.
The latter is a secure option, though the rewards are comparatively less. Equity funds are risky, but they tend to give the best returns for your investment. Income funds are even less volatile than debt funds.
Understand what you are being charged for
You need to pay certain charges when you buy ULIP. Now, the charges vary from one insurer to another. Regardless of that, you need to have a clear idea about the charges. Typically, ULIPs have three types of charges:
- Fund management fees: Before calculating the net asset value, the insurer will deduct a charge for managing your fund.
- Premium allocation fees: A monthly deduction is made for the basic upkeep of the policy, such as distributor fees, underwriting expenditure, and so on.
- Policy administration fees: These are the charges deducted to administer and maintain the policy.
The bottom line
If you are clear about the factors mentioned above, then now is a good time to get in touch with the insurer. Also, let them know if you have any specific queries about their unit-linked plan.
Click here to know more about Kotak Life Unit-Linked Insurance Plans: https://www.kotaklife.com/online-plans/ulip-plan
