The Unit-Linked Insurance Plans or ULIPs as they are called, and particularly the ULIPs that were recently launched are some of the best life insurance plans you can invest in right now. ULIPs are not only insurance plans. They are investment plans too. And the most reviled investment plans at that. some of the ULIPs that were launched recently have undergone drastic changes to become low-cost investment schemes.
But should you consider ULIPs as an investment option?
One question that is common among investors is whether they should go for ULIPs or stick to mutual funds for their investment. ULIPs are no doubt one of the best investment options out there since they provide insurance cover along with investment benefits. The way ULIPs work is quite simple and the insurance companies allot the ULIP units to the investors, whose NAV or net asset value is calculated on an everyday basis.
To put it simply, the ULIPs offered by most insurance companies are broadly classified into two parts. The first part is the Life Cover Premium and the second part is the investment. Mutual Funds, on the other hand, is a pool of money from various investors, which is invested in stocks, bonds, and other such market instruments.
Although there are a lot of differences between ULIP and Mutual Funds, the way they work is mostly the same. That is, just as in the case of ULIPs, in mutual funds too, the investors are allotted units by the company, whose net asset value is calculated daily.
However, the only difference is that ULIPs also provide insurance coverage along with investment as compared to mutual funds, which provide the investor with only an investment option, but no insurance coverage. So, it’s like saying that ULIPs are mutual funds with the added benefit of insurance.
Parameters you should consider while investing in ULIPs
To understand whether you should invest in ULIPs or mutual funds, and which is better among the two, it’s important that you understand the different aspects or parameters that affect them both.
When it comes to expenses, mutual funds cost lesser than ULIPs. This is because, mutual funds have a pre-set cap or upper limit, while ULIPs have no such limits set by the insurance providers, and hence, the cost can sometimes skyrocket.
All ULIP investments come along with tax benefits according to Section 80 C., And an investor can be saving up to Rs. 1,00,000 in the form of taxes if he were ever to invest in them. In the case of mutual funds, only certain types of mutual funds such as ELSS or equity-linked saving schemes can help save taxes for an investor.
Disclosure of portfolio
All the mutual fund houses must declare their portfolios for mutual funds every quarter. Whereas, there is no such requirement when it comes to ULIPs.
Return on Investment
Both these products are long-term investment options, and hence, usually give out good returns overall. However, many analysts are of the opinion that ULIPs are a better option than mutual funds, and feel that these provide more returns. Although, this isn’t the case every time as it all depends on the type of investment you make and the fund manager’s skills to manage the funds.
Best Aviva Life ULIP Plans
The Dabur Invest Corporation and the Aviva group came together to form the Aviva Life Insurance company and are one of the oldest life insurance companies in India. The Aviva group, a UK-based insurance group, serves over 31 million customers across 16 countries. Together with Dabur Invest Corporation, the Aviva Life Insurance company has become all the prominent in the insurance sector, offering products and services of utmost quality and efficiency.
With a wide range of ULIPs to choose from, Aviva stands out as a leader in giving out ULIP plans. Its ULIP plans are well suited for the financial needs of the people of India who require life insurance. They have several participating units, not to mention, various fund managers you can choose from. So, here are some of the best Aviva Life ULIP plans.
Aviva Life Bond Advantage
The Aviva Life Bond Advantage plan is no doubt a great plan for investors with features like capabilities to switch between seven fund units and much more. It also comes with other exciting features such as partial withdrawal after five years into the plan or paying just a single premium or even other useful features such as additional investment options with the top up nominal life covers. However, the investor must pay a minimum premium of Rs. 50,000.
One other major advantage of this plan is that it comes with one inbuilt rider, the Accidental Death Benefit Rider, which assures a lump sum amount to the family of the insured, in case of his or her accidental death. This plan also comes with the option to add loyalty after ten years into the policy term.
Aviva Live Smart Plan
This is an Endowed Unit-Linked plan by Aviva India Life. This insurance plan is non-traditional, which means that it will help investors with their financial needs, according to the amount of risk they’re willing to take. This policy includes a sum assured and a fund value, ensuring the financial security of your family in case of your death or total or permanent disability.
There is loyalty that must be paid, which comes to around one percent of the fund value, and must be paid till the end of the tenure or till the policy matures. Some key features of this policy include offers of seven investment funds, payment of total fund value upon maturity of the policy, flexible policy terms of 15, 20, 25 or 30 years, the option to reduce the sum assured, the option to switch between funds, offer of riders and the option of paying top-up premiums, thereby increasing the savings and also getting a life cover along with it.
Apart from these, the Aviva Life Smart Plan also offers a whole lot of other benefits such as death benefits, maturity benefits, investment returns, income tax benefits, the option to increase the level savings and coverage, a wide range of fund options such as Bond Funds, Enhancer Funds, Growth Funds, Infrastructure Funds, PSU Funds, etc. It also has a lot of other benefits including up to four partial withdrawals after completion of five years, 12 free of cost switches between funds, unlimited top up and more.
The Aviva I-Growth is a non-participating, unit-linked life insurance plan by Aviva Life Insurance, that is oriented toward savings. Not only does this plan offer your family with financial protection, but it enhances your savings as well, by building upon your income. Some notable features of this plan include purchases which are hassle-free, and not to mention, the addition of loyalties.
Some other key features coming along with this plan include the investment risks that are to borne by the policyholder, up to three investment options for funds, total policy charge as low as one percent, three policy terms, exemption of medical examination, option to reduce the sum assured, a 1.35 percent fund management charge a year, easy switching between different types of funds, top class customer service, and not to mention, a lock-in period of five years.
Besides these, it also comes with several benefits such as death benefit, maturity benefit, the addition of loyalty, premium redirection, partial withdrawal after completion of five years of the term and of course, easy switching between funds. The option to reduce the sum assured and the offer of three different types of funds can also be regarded as benefits.
Aviva Young Scholar Advantage
The Aviva Young Scholar Advantage unit-linked, a regular premium payment plan has been designed for all your needs as a parent. Key features of this plan include things such as the guaranteed addition of loyalties that can enhance the value of the funds, Systematic Transfer Plans and Automatic Asset Allocation mechanisms to help protect your investments against any market volatilities and the exemption from paying any future premiums, in case the parent dies.
This plan is a unit-linked plan that helps secure your child’s educational milestones, by offering flexibility to withdraw the funds at every important milestone.
So, if you’re looking for an investment option right now, then ULIPs are your go-getter. In the past, there was a kind of aversion toward ULIPs due to some misconception that they could be exited within three years. This, however, is not the case, and although the lock-in period has been extended to five years, one should ensure that he or she keeps the policy for 12 years or more, to yield maximum benefits out of it.
Also, the facility to switch between funds is a great feature of ULIPs that one can leverage, and is one of the key features that distinguish it from a common mutual fund. This facility allows one to switch between equity and debt funds, free of any hassles. It all depends on how you read the current situation in the market.