Points to Check While Switching ULIP Funds to Book Profit

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Points to Check While Switching ULIP Funds to Book Profit

Posted On : Sep-29-2010 | seen (486) times | Article Word Count : 508 |

Nowadays, ULIPs are the most talked about option as far as financial investment planning is concerned. Certain latest guidelines declared by IRDA ( to be implemented from 1st September 2010), like increasing lock in period for ULIP products from three to five years, increasing insurance cover for those below the age of forty five years from five times to that of ten times and surrender charges being capped, have added a positive impact on investors’ interests.

Unit Linked Insurance Policy (ULIP), is a hybrid of life insurance and investment thereby offering life cover as well as capital appreciation. Most ULIPs offer switching facility that enable shifting of investments in a policy from one fund to another. According to the market conditions, an investor can protect his investments by making a switch to safer debt funds or can switch to higher equity allocation funds during boom time. Generally most life insurance companies offer two or more switches free of cost in a year.
While switching over funds one has to keep in mind certain important factors. It is important to check whether switching is in line with your long term goals or not. Moreover, your asset allocation should be according to your financial needs and goals. Strategic Asset Allocation is the most important investment decision one needs to make as it determines 90% of your portfolio returns. Market movements can alter the debt - equity proportion so to balance out that change you may need to switch over. Tactical Asset Allocation is for short term changes because of your reading of the market.
Another important factor is the appetite for risk. Your risk profile changes with your health, age, and other family events like marriage, child birth and so on. Determine how much risk you can afford to take. Age is again another aspect that influences the decision of switching. If you are young and your risk appetite is more then you can switch over to equity funds. In case you are older and your policy term might terminate soon, you may decide to get maximum returns in this short period by moving to equity funds or stay safe with debt allocation funds. Nowadays, ULIPs are the most talked about option as far as financial investment planning is concerned. Certain latest guidelines declared by IRDA ( to be implemented from 1st September 2010), like increasing lock in period for ULIP products from three to five years, increasing insurance cover for those below the age of forty five years from five times to that of ten times and surrender charges being capped, have added a positive impact on investors’ interests.
Monitor your period of maturity or time when your policy is going to mature. For example, if the time period of maturity of your policy coincides with a specific event like a house purchase, or child’s higher education, the right decision will be to switch over to a safer investment to prevent wealth erosion due to market movements.
Generally, companies offer different types of fund options as per the amount of risk one can take. An active investor can switch from an aggressive fund to a conservative fund when the market is at its peak to cancel uncertainty and vice versa. Many financial planning consultants hold the view that the biggest advantage of ULIP is the switching facility. By good timely management according to market movements, keeping in mind the above points, switching of ULIP funds can optimize your returns in a rewarding manner.

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<h1>Points to Check While Switching ULIP Funds to Book Profit</h1> Author: <a href='http://www.articleseen.com/profile_Sanjay Mathew.aspx'>Sanjay Mathew</a> Unit Linked Insurance Policy (ULIP), is a hybrid of life insurance and investment thereby offering life cover as well as capital appreciation. Most ULIPs offer switching facility that enable shifting of investments in a policy from one fund to another. According to the market conditions, an investor can protect his investments by making a switch to safer debt funds or can switch to higher equity allocation funds during boom time. Generally most life insurance companies offer two or more switches free of cost in a year.
While switching over funds one has to keep in mind certain important factors. It is important to check whether switching is in line with your long term goals or not. Moreover, your asset allocation should be according to your financial needs and goals. Strategic Asset Allocation is the most important investment decision one needs to make as it determines 90% of your portfolio returns. Market movements can alter the debt - equity proportion so to balance out that change you may need to switch over. Tactical Asset Allocation is for short term changes because of your reading of the market.
Another important factor is the appetite for risk. Your risk profile changes with your health, age, and other family events like marriage, child birth and so on. Determine how much risk you can afford to take. Age is again another aspect that influences the decision of switching. If you are young and your risk appetite is more then you can switch over to equity funds. In case you are older and your policy term might terminate soon, you may decide to get maximum returns in this short period by moving to equity funds or stay safe with debt allocation funds. Nowadays, ULIPs are the most talked about option as far as financial investment planning is concerned. Certain latest guidelines declared by IRDA ( to be implemented from 1st September 2010), like increasing lock in period for ULIP products from three to five years, increasing insurance cover for those below the age of forty five years from five times to that of ten times and surrender charges being capped, have added a positive impact on investors’ interests.
Monitor your period of maturity or time when your policy is going to mature. For example, if the time period of maturity of your policy coincides with a specific event like a house purchase, or child’s higher education, the right decision will be to switch over to a safer investment to prevent wealth erosion due to market movements.
Generally, companies offer different types of fund options as per the amount of risk one can take. An active investor can switch from an aggressive fund to a conservative fund when the market is at its peak to cancel uncertainty and vice versa. Many financial planning consultants hold the view that the biggest advantage of ULIP is the switching facility. By good timely management according to market movements, keeping in mind the above points, switching of ULIP funds can optimize your returns in a rewarding manner.
About the Author: We represent one of the top life insurance company India. Our product ranges from life insurance, <a rel="nofollow" href="http://www.inglife.co.in/productcenter/productcenter-retirement-goldlife.shtml">pension plan</a>, child education plans and many other financial planning products. Our online advisers and calculation tools will help you to pick the best <a rel="nofollow" href="http://www.inglife.co.in/pua/index.aspx">insurance policy</a> that meets your requirement. Article Source: <a href='http://www.articleseen.com/Article_Points-to-Check-While-Switching-ULIP-Funds-to-Book-Profit_35308.aspx'> http://www.articleseen.com/Article_Points to Check While Switching ULIP Funds to Book Profit_35308.aspx</a>

Article Source : http://www.articleseen.com/Article_Points to Check While Switching ULIP Funds to Book Profit_35308.aspx

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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.

Keywords : life insurance India, financial investment planning, ulip, pension scheme, pension plan, insurance policy, child education, l,

Category : Finance : Insurance

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