A Step-by-Step Guide to Choose the Best ULIP Plan in India

ULIP is among the few financial products designed to give you the dual benefits of protection and growth. Since not all ULIPs are the same, this blog shares a comprehensive step-wise list to help individuals choose the best ULIP plan for themselves. 

Start by understanding what is ULIP, gradually exploring the steps to choose the right ULIP that matches your financial goals and risk tolerance. 

What are ULIPs?

Unit Linked Insurance Plans (ULIPs) is a hybrid financial tool designed to give you the combined benefits of Protection Plans and Investment Plans. They have become an attractive investment option for many because they provide Life Insurance coverage while letting policyholders earn market-linked returns.

Most ULIPs are flexible and allow policyholders to enjoy partial withdrawal after the initial lock-in period. Now that you’ve understood what is ULIP, you may explore the Shriram Life Wealth Pro Plan (UIN: 128L096V01). 

Besides providing dual benefits of protection and growth, this ULIP features a customised life cover, multiple fund options, cost-free fund switching, and liquidity benefits to help you achieve your financial goals. 

How do ULIPs Work?

People new to ULIP are generally unsure of how ULIP works, so let us clear it. When you purchase a ULIP and make premium payments, a portion of your premiums is used to provide life coverage while the balance is invested in market securities, such as equity, debt, balanced funds, etc., to earn market-linked returns. 

This investment grows over a period (subject to market performance), and policyholders receive the accumulated fund value on maturity. In case of the policyholder’s untimely death, the insurer pays the amount to the nominees. 

Steps to Select the Best ULIP Plan in India

Step 1: Understand ULIPS

You should never invest in any product you don’t clearly understand, so start by understanding what is ULIP, how ULIP works, and the different types of ULIPs. While there are numerous benefits of ULIP plans, the associated ULIP risks should also be considered before choosing any plan.

This step is time-consuming, but it can help you understand the ins and outs of ULIPs so you choose the right goal-aligned plan.

Step 2: Assess Your Financial Goals

Choosing the right ULIP plan depends significantly on what you’re investing for. So, pause and ask yourself whether you’re investing to build a substantial retirement fund, cover your child’s higher education expenses, wealth creation, or another goal. 

Then, explore ULIP plans that help you achieve them. For instance, you may search for ULIPs with primarily equity funds for wealth creation and plans with debt funds to earn stable returns. 

You may consider the Shriram Life Growth Plus Plan (UIN: 128L066V03) as it provides multiple fund classes and investment schemes to suit diverse financial goals.

Step 3: Determine Your Risk Profile

Let your comfort with market volatility guide your ULIP choice. If you prioritise wealth creation and can handle moderate to high market risk, then you may invest mostly in equity funds. Individuals with low-risk tolerance should prefer ULIPs with more debt and balanced funds. 

Step 4: Compare Policies

Not every policy is created equally, so you should evaluate shortlisted options by analysing their distinct ULIP risks, features, and benefits.

Compare each option based on fund performance over the last five to ten years, flexibility to switch funds, partial withdrawals, taxability of ULIP, premiums, minimum lock-in period, available fund options, and other factors that matter the most to you. 

The best ULIP will always be transparent and align with your financial desires, risk tolerance, and expectations. 

Step 5: Check Associated Charges

ULIPs generally have numerous charges for premium allocation, mortality, fund management, etc. You should choose plans with minimum to no associated charges to maximise your returns. 

We provide ULIPs like the Shriram Life Fortune Builder Plan (UIN: 128L038V03) that provide cost-free, unlimited fund switching to benefit policyholders. You can explore our Shriram Life Wealth Pro Plan (UIN: 128L096V01) if you’re looking for plans with zero charges on fund switching, premium redirection, and auto transfer options. 

Step 6: Evaluate Tax Benefits

The best ULIP provide more than protection and growth benefits; they help policyholders enjoy immediate savings through tax benefits. Sections 80C, 10(10D), and 45 determine the taxability of ULIP. Section 80C allows policyholders to deduct premium payments to lower their taxable liability up to ₹1.5 lakh/annum. 

Section 10(10D) makes maturity proceeds tax-exempt if applicable rules are met. Your fund transfers within ULIP remain tax-free under section 45. Plan your investments strategically to avail maximum tax benefits of ULIP.

Step 7: Finalise and Purchase

Once you’ve evaluated the shortlisted ULIPs against all the above factors, finalise the one that aligns with your goals, risk profile, budget, and expectations. 

Steps to Buy a ULIP Policy Online

If you’re ready to buy Shriram Life Insurance ULIP plans online, start by visiting the shortlisted policy page and follow the steps below:

• Fill in the details at the top and click ‘Apply Online.’
• Verify your contact number via OTP to proceed.
• Customise the policy by choosing policy value, premium amount, premium frequency, fund choice, etc. 
• Review the policy terms and confirm the details.
• Make the payment and receive policy confirmation details on your registered contact details.

Factors to Evaluate Before Investing in ULIP Policies

When choosing ULIP policies, always evaluate them based on factors like their flexibility, features, lock-in period, fund options, past performance, premium, associated charges, taxability of ULIP, and other aspects relevant to you. You can consult a certified financial expert for personalised guidance if you’re overwhelmed with the options and cannot make independent decisions. 

Conclusion

Choosing the right ULIP can help you build a financially secure future through market-linked returns while protecting your family members under reliable Life Insurance coverage. If you’re unable to choose the right plan, following the steps discussed above can help. 

At Shriram Life Insurance, you can explore various ULIPs designed to fulfil diverse financial goals. We also provide Savings Plans and Child Plans that complement ULIPs for maximum economic benefit.