At any given stage of your life, you might be interested in growing your wealth or expanding your investments. ULIPs and Endowment plans are two of the many methods through which you can confirm an additional source of savings over a fixed period. These opportunities exist to urge you into building a more secure future for you and your family—so you are not left financially crippled in times of crisis. So here is your chance to get acquainted with the various attributes of ULIPs and Endowment plans and decide on which would work better for you.
Also known as a Unit Linked Insurance Plan, this particular investment instrument has gained immense popularity over the last couple of years. ULIP enables you to invest in stocks, bonds and mutual funds in addition to purchasing a general insurance plan. Your returns would be calculated on the basis of trends in the capital markets. This financial product takes into account that a lump-sum payout in the event of a death or a health emergency might not prove to be sufficient for other hefty expenses. So by putting away your money into the fund of your choosing, you are basically preparing down a safety net for the future. You will have to keep in mind the levels of risk associated with each fund; however, as is the case for most investments, the high-risk factor may result in you receiving higher returns. For example, the Equity Plus fund is rated quite high on the risk-return scale. Your returns would be deduced on the basis of the daily unit price as well as the value of the fund itself.
This programme serves to provide many benefits. You would be able to access those funds and draw money for occasions such as a child’s marriage or education, a dream house, a vacation and other cost-intensive eventualities. It could also lead you into a routine of keeping track of the latest trends in the capital markets, a skill that could only prepare you for tackling other financial enterprises in the future. Most importantly, it affords you a chance to invest without having to seek out unknown or expensive routes; it falls under an integrated plan of insurance. This distinction truly marks it as special: you are not only in the business of profiting, you are readying for a content future for yourself and your family.
This particular financial service is also packaged with a customary insurance policy and operates under the same principles of investing for future savings. Under the rules of an Endowment Plan, you will be able to get insured for a predetermined period. Upon the end of your policy term, you will be able to receive the sum assured as well the bonus accumulated over the term of the policy. If the policyholder dies, then the lump sum amount is handed out to the nominee in addition to the bonus gathered for the years the policy was active. This particular investment programme is particularly advantageous for individuals who fail to control their spending habits. This product would encourage them to direct a certain amount of their money into what fundamentally acts as an insurance payout. Unlike certain ULIP strategies, this financial approach holds minimal risk as you or your family member is guaranteed a payout regardless of any outcome. However, as is the case for Unit Linked Insurance Plans, you can avail numerous tax benefits, so your decision has to be made based on your specific demands and goals. You will also have to consider the different riders that may be applicable to the endowment plan offered. Each sort of endowment plan being extended to you will similarly also contain a particular bonus policy, so you have to be mindful of the sum you are guaranteed upon any given eventuality.
Thus, once you are able to grasp the various features, advantages, and disadvantages of both a Unit Linked Insurance Plan and an Endowment Plan, you will be better positioned to make a fully informed decision and lay down a protection plan for your future.