In this day and age, it is crucial to not only secure the future of your loved ones with a viable life insurance plan but also to grow your wealth simultaneously. Fortunately, with the advancement of technology, it is becoming increasingly simpler to find viable solutions for both. One such solution is ULIPs.
What is ULIP?
To understand what is ULIP, you need to understand its role.
A life insurance policy is a basic financial necessity these days. ULIPs are a form of life insurance that not only secures the financial future of your loved ones but also helps grow your wealth in real time.
What is ULIP can be best explained by its full form, which is Unit Linked Insurance Plans. Basically, a ULIP allows you to provide financial coverage in the form of a sum assured that is paid as a death benefit to your beneficiaries after your demise. It also invests part of your premium in the unit-linked market to earn profits. The insurer makes the investments on your behalf based on your risk appetite, and you can avail yourself of the benefits in the form of a return on investments.
What is a ULIP calculator?
A ULIP calculator is an online tool that insurance providers make available on their websites to help you simplify the process of purchasing ULIPs. ULIP calculators are useful gadgets that take into account several factors, which are as follows:
- Your financial goal, i.e., how much money you wish to make in a specified period.
- Your risk appetite, i.e., whether you want to take more risks with equity, less risk with debt funds, or take a balanced approach.
- Your investment duration, i.e., the time during which you want to make investments.
- The duration for which you wish to keep your money invested to earn your returns
- Your expected rate of return.
You can choose to make investment payments for a shorter duration and keep the money invested longer. The ULIP calculator will consider these factors and determine a suitable investment amount for you.
Part of the premium estimated by the ULIP calculator will be set aside as investment toward the sum assured, while the remainder will be used to build your wealth. The ULIP calculator also takes this factor into account to ensure that the investment amount is substantial enough to grow your wealth and reach your goal in your desired time.
How does the ULIP calculator help plan and manage your portfolio?
When you understand what is ULIP, ULIP calculators become extremely valuable tools to help plan your finances. These online gadgets help you plan your investments in insurance and unit-linked instruments effectively without upsetting your current financial plan. ULIP calculators offer the following benefits to ease your struggles and build your portfolio:
- They simplify your financial plan – ULIP calculators take your desired parameters into account, including your expected return on investment, financial goals, duration of investment and risk appetite. These factors help plan a compounded rate of profit to help achieve your financial goal in a specified time frame.
- They provide accurate investment information – ULIP calculators factor in your risk appetite, i.e., whether you want to invest in a risky, risk-free, or a balanced portfolio. The insurer will offer you options from equity and debt funds. Equities usually have higher risks but also yield higher profits, whereas debt funds are safer investments but offer limited profits. You can choose either of them on the ULIP calculator or take a balanced approach.
- They let you choose your profit margins – ULIP calculators also allow you to choose how much return on investment you expect from investing in each type of market instrument. The amount you need to invest will directly correlate with your expected ROI. Therefore, you can adjust the parameters on the ULIP calculator to arrive at a suitable and manageable investment plan.
- They help customise your plan – ULIP calculators allow you to adjust the various parameters online. Thus, you can choose higher or lower investments and returns, as well as effectively determine your investment duration to reach your financial goals. Since you have a clearer picture, you can choose ULIPs that are best suited for your financial goals and meet your income vs expense ratio effectively.
The truth of the matter is that ULIPs are beautiful insurance solutions, and ULIP calculators make it easier for you to select the best policies. The benefits of using these ULIP calculators are simply to determine a suitable ULIP plan for you without overwhelming your finances.
Once you understand what is ULIP, it becomes increasingly easier to use ULIP calculators to your advantage. These simple online gadgets primarily help you choose the best investment plans and determine exactly how much you need to put away and for how long to reach your financial goals. Therefore, nothing takes you by surprise.
