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Fund options in ULIP
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Posted On :
Sep-28-2010
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Article Word Count :
506
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Unit Linked Insurance Plan (ULIP) is a financial option that combines insurance safety through savings and growth opportunities from returns.
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ULIPs give a new dimension to the word financial planning. Their innovativeness is evidenced by the multiple investment options that they provide to investors. ULIP can broadly be classified depending on the risk tolerance of investors and the time horizon for which the insured wants to stay invested.
Different fund options in ULIP on the basis of Investment:
1. Aggressive ULIP Funds: These are funds in which a majority of the investment portion goes towards equity. They are optimum for investors expecting maximum capital gains in the long term and willing to take high risk.
Equity ULIP life insurance involves investing in stocks of public companies. The investments are subject to market conditions and can be profitable only if the investor considers a long term investment horizon.
Growth ULIP fund is another kind of equity ULIP. Here, investment is made in companies that are making significant progress in terms of their revenues, earnings, etc. These funds are best for investors aiming to achieve high returns on their investments.
2. Balanced ULIP Funds: These funds are a mix of equity and debt i.e. a portion is invested in fixed income funds or secured instruments and the rest into company stocks. One may say that these are hybrid funds involving investment in stocks for capital gains as well as in bonds or fixed income securities for regular income. These instruments work well for investors who wish to take moderate risks.
3. Conservative ULIP Funds: These funds involve low risk as only a minor portion of the investment is into equity with the major portion being invested into debt making it more favorable for risk averse investors.
Income ULIP funds are those which provide a steady income to the investors by investing in areas like government securities, bonds etc. The payouts in these funds may be monthly, quarterly or semiannual in some cases.
Bond or Fixed Interest ULIP are similar to income funds as they provide fixed returns.
Cash ULIP funds would come into this category as they give low returns and are for short term. These funds invest in money market instruments giving fixed returns as in treasury bills, commercial paper etc.
Money Market ULIP funds are those where the investment is made in secured instruments like commercial paper (CP), certificate of deposit (CD), treasury bills (TBs) etc. These are short term instruments with almost no risk and assured returns.
Apart from the above there are some other ULIP funds like:
Sectoral ULIP fund, in which the investment is made in a particular sector of the economy as IT, Agriculture, Pharmaceuticals etc depending upon the financial insight of the fund manager.
Tax Saver ULIP fund, in which the main aim of the investor is tax benefit. The fund is so designed as to achieve maximum waiver under different exemption schemes of the Income Tax Act.
Investment in ULIP gives the investors varied fund options to choose from to meet their desired objectives.
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Article Source :
http://www.articleseen.com/Article_Fund options in ULIP_35004.aspx
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Author Resource :
We represent one of the top life insurance company India. Our product ranges from life insurance, pension plan, child education plans and many other financial planning products. Our online advisers and calculation tools will help you to pick the best insurance policy that meets your requirement.
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Keywords :
life insurance India, financial investment planning, ulip, pension scheme, pension plan, insurance policy, child education, l,
Category :
Finance
:
Insurance
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