How to select the best ULIP fund option for yourself

While there are numerous other options for investment, it is the new-age ULIP plans that have gained the faith of a majority in order to invest their funds. The prime reason why investors prefer ULIPs over the rest is because of its multiple fund options. These multiple funds options allow investors with maximum benefits.

On the other hand, investing in the right type of fund will garner high returns which are beneficial to the investor for the longest run. In order to find out which ULIP funds are appropriate for your investment, stay updated about the type of funds available under this policy. Therefore, if you’re willing to select the best ULIP fund option for yourself, then keep reading:

List of the types of funds available offered by ULIPs:

  1. Equity funds for high risk

If you’re someone who has a high-risk appetite, then the investment in equity funds is a perfect choice for you. Typically, these funds have 70% of exposure in equities, they provide high rewards as well as high returns. At the same time, investment in equity funds is considered a risky affair. Invest in it only if you’re ready to bear the risk involved in equity funds.

2. Bond funds for moderate risk

In order to invest in fixed instruments like income, government securities, and corporate bonds, investment in bonds is considered appropriate. This is because of the fact that bond funds involve medium risks. Additionally, their exposure in the equity markets ranges from 10-15%. So if you’re keen on taking a risk with moderate rewards, then see to it that you only invest in bond funds.

3. Balanced funds for medium to low risk

An ideal choice for funds is an investment in balanced funds. Balanced funds offer its customers with a combination of high risk as well as low risk. Under a balanced fund, the total amount of investment is fairly distributed high-risk equities as well as low-risk equities. While high-risk equities consist of company stocks, the low-risk equities comprise of fixed income instruments.

4. Cash funds for low risk

Popularly know as either money fund or liquid fund, this type of fund directly encounters low-risk opportunity as well as short term markets. Due to this, cash funds are labeled as the safest type of fund investments. Under a cash fund, the investor is eligible to receive a sum of returns, at the time of maturity. In order to enjoy the benefits of low-risk investment, ensure that you invest in cash funds only.

Switching Policy:

Being a transparent product of insurance, ULIPs provide its investors with the benefits of flexibility. When you invest in a ULIP Policy, you are allowed with the option to either switch or redirect your funds based on the current trends of the market. The switching options permit the movement of funds and the redirection options allows you to enhance your ULIP performance.

Investing in ULIP’s fund’s option is typically based on the risk appetite of the investor. Therefore, keep in mind the pros and cons of each fund in order to make the best use of it. Opting for the right type of fund protects you from the market fluctuations by balancing the investment portfolio between the debt fund and the equity fund.

Now that you have a complete idea on how to select the best ULIP fund option for yourself, see to it that you make the investment decision wisely. In the end, you will be responsible for your decision, therefore, invest in only those funds that suit your palette of risks.

Author: Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to editor.webposts@gmail.com.