What are ULIPs

What are ULIPs?

Unit linked insurance plans (ULIPs) are insurance plans that combine the benefit of investment with insurance. They give the investor an option to put a part of their premium in various investment portfolios and the portfolio will then grow depending upon the performance of the assets that they hold. The important thing is that the benefits at the end of the plan depend upon the performance of the portfolio where the premium is invested.

How do you track them?

Just like you see the performance of mutual fund schemes by looking at their net asset value (NAV) and their growth, one has to look at how the NAV of the ULIP plans have moved and the returns they show. This will ensure that the investor knows how his investment is performing. Insurance companies now declare their NAV regularly with several schemes declaring it on a daily basis.

What does the movement depend on?

The movement of the NAV of the plan will depend upon the composition of the assets of the plan. This means that equity options or growth options in the ULIP plans will show a different movement as compared to a conservative option or a debt portfolio. The nature of the plan and the investment will determine the way in which the performance is witnessed. Investors can make their investment choice based upon the features of a plan as well their objectives and risk taking ability.

Switch options?

A choice is available for investors to switch between various options. By looking at the performance of their particular option they are able to make the right decision in an effective manner as they can balance the risk along with the kind of returns that they would like from their investments.