What are the different types of ULIPs?


A ULIP investment can be an essential part of your financial portfolio. It is a long-term investment solution that can have a lock-in period of five years. During the on-going lock-in period of a ULIP plan, you can double your invested corpus as well as garner relatively high returns. However, you can obtain ULIP returns based on your selected type of fund and your risk appetite. Therefore, let’s go through the two main types of ULIP funds available under a ULIP policy:

  1. Equity Funds

Equity funds can be risky since the returns are linked to the market. If the market performs well, you can receive relatively high returns. Therefore, you should invest in equity funds if you can bear the risks of the market. Typically, you can opt for an equity investment when you are young since you have minimal financial dependents.

  1. Debt Funds

Unlike equity funds, debt funds can be the safest option for investment. However, you might be able to receive low returns from debt funds. Typically, a debt investment can be the right choice for you if you have high financial responsibilities and low-risk appetite.  If you have chosen an equity investment at a young age, you can move to debt funds when you grow older.

After identifying your risk appetite, you should take time in figuring out your investment goals. While many of you might wish to obtain decent returns, the rest of you might aim to fulfil your life goals with the help of a ULIP investment. If funding your child’s education or building a substantial corpus is a part of your investment plan, let’s take a look below to know the types of ULIP plans based on your investment objective:

  • Child’s education

As parents, your child’s education can be your top priority. To provide your child with the best education, you might require adequate funds. If you are unable to accumulate money to fund your child’s education, you should buy a ULIP policy. With a ULIP policy, you can meet the financial requirements of your children even in your absence.

  • Generation of wealth

A ULIP policy can help you to build a large corpus to secure your future. If you wish to accumulate an ample amount of money, you should invest in a ULIP plan at a young age. Since you have a lot of time in your hands when you are young, you can generate enough money by the time you grow old.

The primary objective of a ULIP plan can be the growth of your funds. For the creation of wealth, you can choose between the following types of ULIP policies mentioned below:

  1. Life stage and non-life stage based

Your financial needs and risk appetite can vary based on your current life stage. For instance, if you get married, your risk appetite can be low and your financial requirements can be high. As your life stage progresses, you should be able to diversify your investment portfolio with the help of a ULIP plan.

  1. Guarantee and non-guarantee

Under a ULIP policy, you can receive guaranteed as well as non-guaranteed benefits. While guaranteed benefits can protect you from the market risks, the non-guaranteed benefits can allow you to choose from a host of investments.

  1. Single premium and regular premium

A ULIP policy can be a flexible investment option that can allow you to select the premium based on your convenience. Under a ULIP policy, you can select between a single premium policy and a regular premium policy. While a single premium plan can let you pay the premium in a lump-sum amount, the regular premium option can allow you to make the premium in a specific duration.

To sum up, a ULIP plan has been a part of the investment market for a long time. There are a diverse range of options you can choose from based on your evolving needs and investment goals. Before choosing the right ULIP plan for you, compare various options in the market and select a reputable insurance company.