3 Ideas to Ensure Lower Risk and Better Returns in ULIP Plans

In today’s world just earning money is not enough. To fulfill your dreams and goals and to lead a comfortable lifestyle, you need to make your money work for you. For this, it’s imperative that you invest in the right investment plans!

And, obviously, when you invest your hard-earned money, you want to generate high returns while enduring lower risk.



Well “YES” if you invest in Unit linked Insurance plans (ULIPs)!

Known to be the most flexible and dynamic investment options available today, ULIPs offer investors the benefit of both insurance and investment. ULIPs are the professionally managed protection-cum-investment plans that provide investors with an opportunity to enter into the growing equity market.


So, if you are looking to generate good returns on your investment, without risking too much on volatility, then ULIPs should be your preferred choice. To make the most out of the ULIP investment, here are three ideas:

  1. Regular Investing

Ulips come with a lock-in period of five years. This lock-in period inculcates regular saving discipline to generate compounding returns on your investment over an extended period of time. Therefore, it is vital that you pay your premiums regularly, even after the lock-in period ends. And in case you need emergency funds, you can opt for partial withdrawal option. But do not exit your ULIP investment plan at any cost!

Understand that ULIPs are designed to stay invested for a long-term horizon. Moreover, your charges decrease too after the lock-in period ends and insurers provide you with additional loyalty rewards if you stay invested for ten years or more.


2. Automatic Rebalancing

One of the unique features of ULIPs is it’s ‘Fund Switching’ option. It allows investors to protect their ULIP investment from market fluctuations by balancing their portfolio between equity and debt funds, thereby, maximizing returns.

However, not everyone has the knowledge to monitor the market movement efficiently or manage the fund allocation. Such investors can take advantage of the automatic rebalancing management opportunity provided by insurance companies.

In this, the insurer switches the funds automatically as per the instructions given by the investor. Investors can even use this option to make programmed switches every month, wherein on a fixed date, an amount can be switched from one fund to another.


3. Rupee Cost Averaging

As mentioned before, regular investment in ULIPs is essential. This is true because when you invest regularly, you automatically get the benefit of rupee cost averaging.

In the rupee cost averaging approach, you make periodic investments (mostly monthly) irrespective of whether the market is going high or low. This helps you accumulate the units of a fund at various prices (known as NAV of a fund).

Meaning, when the market is down, you get more units, and when it is up, you get fewer units. So, over time, as your ULIP investment progresses, you invest across all market phases, thus bringing down your average cost per unit over the long-term.

Things to Remember Before Investing

Before choosing the right ULIP plan, investors need to assess their financial capabilities and future needs in order to maximize returns. For instance, one should choose a plan that caters to their risk appetite.


Today, many insurers offer multiple fund options for investors. If you are an aggressive investor, therefore, you can invest in equity funds to improve your return prospects over the long-run. On the other hand, conservative investors can invest in balanced funds for low risk and stable returns.

Further, it is important to pick the best ULIP plan that suits your investment goal. For this, you can compare guidelines offered by various insurers, including their premium quotes, exclusions, benefits and claim settlement ratio to ensure that you purchase a good plan.

For instance, Max Life Insurance offer ULIP plans with a simplistic approach to invest in the market with multiple fund options. It also boasts of the highest claim settlement ratio of 98.26%, which is higher than that of Life Insurance Corporation of India (98.04%). It also allows you to exercise the switching option for free, levies lower ULIP charges and offers flexibility to choose premium payment term and policy term.

In a nutshell, ULIPs are excellent investment plans, offering varied investment funds to multiply your returns over a significant amount of time. Not only do ULIPs provide your loved ones with a life cover, but also act as your wealth creation tool. Along with this dual benefit, ULIPs triple over as tax saving investment plans with controlled market risk!