ULIPs have been an underrated form of investments. Even
if investors are aware that the funds invested in ULIPs are eligible for
returns and benefits such as tax exemptions, they still steer clear of the
plans. Even if the ULIP investments are subjected to capital market risks, it
is still one of the best options one could opt for.
But What Exactly is ULIP?
It is basically a life insurance product which provides
complete risk cover to the insurance holder in addition to the different
investment options which can be spread across stocks, shares, bonds or even
mutual funds. As a complete plan, ULIP is available for customization depending
on the risk appetite and financial goals.
Should I Opt for a ULIP plan?
If you have an appetite for risk, ULIPs are perfect for
you. The entire investment risk is borne by the investor when it comes to
ULIPs. If you are adventurous in terms of investments and the market
fluctuations, then experts recommend that you take in to account the margin of
risk you are willing to take.
· It
is beneficial when you have long term financial goals such retirement planning,
healthcare funds, children’s education, and future fund accumulation for other
major occasions and needs
· You
can easily track your portfolio even without a fund manager. Flexible plans let
you switch from high risk plans to a low risk ones easily without much ado.
· If
you are a long term investor, ULIPs are the perfect investment plan.
· Get
the privilege to choose from low risk, mid risk and high risk funds during
signing up for the policy.
· There
is no age limit as such for investing. Therefore, a ULIP is available for every
age group that has a financial liability or long term needs in general.
Why HDFC SL Crest ULIP?
One of the classic ULIPs from the house of HDFC, HDFC SL Crest offers investment options, financial protection all in
one go.
· Features:
o You can choose the total sum assured. It
could be either 10 times or 40 times of the annual premium paid. Therefore, you
get to regulate the level of protection in general.
o Annual premiums are a norm with every ULIP
plan. However, you can pay the regular premium amount starting at 50,000 per
annum. However, there is no upper limit for the maximum amount. Analyse the
risk and appetite to figure out your capping amount.
o The tenure of policy term is 10 years.
However, you need to pay your premiums for 5 years only.
o The entry age in to the policy is 14 years
and the maximum age at the time of policy maturity should be 65 years.
o Benefits on maturity are the USP for the HDFC
SL Crest ULIP plan. The maturity fund paid out is equivalent to the Net Asset
Value on the current date of redemption.
o You family is protected even after your
demise. The amount paid out is either the sum assured or the fund value
whichever is higher.
o The ULIP is eligible for tax deductions under
80C too!
·
Investment Options Available:
o
Blue
Chip fund: Get exposed to large cap equity funds and related securities. Even
if the risk entailed is high, it is a safer option because 80% of the
investment is into equities and the other 20% is in to money market tools such
as deposits, cash, mutual funds and others.
o
Opportunity
funds: HDFC SL Crest opportunity fund is usually a very high risk, high returns
deal. Very similar to that of the Blue Chip fund, the equity related securities
are just higher than the former.
o
Balanced
Funds: hedging of funds is always advisable for several reasons and HDFC SL
Crest is no different. Medium appetite risk can draw investors towards a
balanced option where the securities to equity proportion is spread in a
proportion that is roughly 60-40 respectively. Additionally, debt funds help
balance out the losses in case of major market fluctuations.
o
Income
funds: a moderate risk plan, the funds invests in liquid mutual funds which are
a part of the government securities. It has a higher duration and has better
credit exposure.
How Do You Choose The Funds?
As part of the HDFC SL Crest ULIP, different investors
can find a myriad of options for themselves. It could be debt, equity or even a
mix of both. Young investors who are willing to experiment and risk the sum of
investment go largely for the funds that boast of higher returns and higher
risks. However, when one needs to settle down, investors start looking for
suitably stable options such as debts and low risk equities. Additionally they
expect the funds invested in insurance be more instead of putting it in the
market for a stable return.
