Dual Benefits, Smart Choices: What To Check Before Buying A ULIP Plan In India

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Before buying a ULIP plan in India, assess your need for combined insurance and investment, understand the fee structure, and choose suitable fund options. ULIPs offer long-term benefits but require careful planning. With improved transparency and digital access in 2025, they remain a viable tool for disciplined wealth creation and protection.

Unit Linked Insurance Plans (ULIPs) continue to attract investors in 2025 for their hybrid offering of life insurance and market-linked investment. While they promise long-term wealth creation and protection, choosing the right ULIP requires careful evaluation of costs, fund options, and alignment with personal financial goals.

Key Factors To Consider Before Buying

- Assess your need for a combined insurance-investment product. ULIPs are ideal for those seeking disciplined investing with life cover, but may not suit individuals with separate insurance and investment strategies.

- Understand the charge structure. ULIPs involve multiple fees—premium allocation, fund management, mortality, and policy administration charges. Transparency in these costs is crucial to avoid erosion of returns.

- Evaluate fund options. ULIPs offer equity, debt, and hybrid funds. Choose based on your risk appetite and long-term objectives. Most plans allow switching between funds without losing insurance benefits.

- Check lock-in period and liquidity. ULIPs have a mandatory five-year lock-in, making them suitable for long-term goals but less flexible for short-term needs.

- Review past performance and insurer credibility. Opt for plans from reputed insurers with consistent fund performance and robust claim settlement ratios.

Additional Insights For 2025

- ULIPs now offer improved transparency and digital access, allowing policyholders to track fund performance and switch allocations online.

- Tax benefits under Section 80C and 10(10D) remain a key attraction, though investors should verify current limits and exemptions.

- Some ULIPs offer loyalty additions and booster benefits after specific policy durations, enhancing long-term value.

Investor Sentiment

ULIPs are gaining traction among young professionals and goal-oriented investors who prefer structured financial planning. Experts recommend aligning ULIP investments with milestones such as children’s education, retirement, or home purchase, and reviewing the plan annually for optimal results.

Sources: Mint, Groww, Ground Report

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