Types of ULIP Plans
Types of ULIP Plans:
There are several types of ULIP plans in India. ULIPs can be classified in various ways, such as:
Types of ULIPs by end use of funds: This categorising is based on the purpose for which you buy a ULIP policy. The four kinds of ULIPs under this label are –
ULIPs for children’s education: These policies help you save for the specific purpose of coping with your child’s tuition and other related academic expenses. ULIP Child Schemes have perks such as regular payouts to meet an educational landmark in your child’s life.
ULIPs for wealth creation and savings: These policies focus on increasing your investment and creating a larger corpus of savings for your future.
ULIPs for retirement planning: These policies help you plan for your retirement years either by giving you a lump sum at retirement or through a monthly income after you stop working.
ULIPs for medical emergencies: These policies focus on meeting your medical requirements in the future.
Types of ULIPs by funds invested in: When you buy a ULIP, you get the chance to select the kind of mutual funds that you want your money invested in. There are three kinds of funds in which ULIPs are usually invested –
ULIPs investing in equity funds: These type of Unit Linked Insurance Policies are invested in equity funds, which are actively traded on the stock market. The risk level is very high here.
ULIPs investing in debt funds: When the policy invests your money in a debt fund – which consists of instruments such as government, quasi-government securities, corporate bonds, and other fixed income instruments, the risk level is very low and a growth – albeit slow – is guaranteed.
ULIPs investing in balanced funds: ULIPs that invest in balanced or hybrid funds, which are a mix of equity and debt funds, it falls under this category. Balanced funds are moderate in risk level and gives higher returns than debt fund-ULIPs.
Types of ULIPs by death benefits: This categorisation takes into account how the death benefits are disbursed. The two main subsets under this type of ULIP are:
ULIPs where you get the sum assured or the fund value: Some companies offer ULIPs in which the total amount that you get as death benefits is either the total sum assured or the value of the funds in which the policy is invested. The amount you receive would be the higher amount of the two options.
ULIPs where you get both sum assured and fund value: ULIPs offered by some companies give the nominees of the policyholder the cumulative total of both the sum assured and the fund value as death benefits. Needless to say, these funds will be more beneficial to the family.