Unit Linked Insurance Plans, or ULIPs, combine investment and life insurance. ULIP plan is an investment decision that offers you financial security and lets your money grow simultaneously. However, it can be tricky if you are unaware of all the details of a ULIP policy. One of the many queries that often come up is the lower and upper limit one can invest in a ULIP plan.
What is the Maximum and Minimum That One Can Invest in a ULIP Plan?
The maximum and minimum amount one can invest in ULIP plans vary from company to company. In general, the lower limit of ULIP investment every month is about ₹1500.
In addition, there is no limit to the maximum premium amount. The upper value of the investment can be any number the investor is capable of paying, depending on their investment plans and goals.
- Minimum investment – About ₹1500 per month, which means ₹1,50,000/year
- Maximum investment – No limit
What is the Minimum Lock-In Period for ULIP?
While investing in a ULIP plan, you must also consider its other aspects. One of them is the ULIP investment lock-in period. ULIP plans come with a five years lock-in period. And, to make the most out of the ULIP plans, it is advised you pay the premiums for the entire term. If you break the policy any time before the lock-in period, you will have certain surrender charges or deductions withdrawn from your fund.
Can I Exit ULIP Before Five Years?
ULIP plans come with a five years lock-in period. However, if required, the investor can terminate the fund within the lock-in term. As you surrendInvester the ULIP fund, your risk cover will terminate. However, the company will pay the surrender value at the end of the five years. The risk cover that the ULIP fund offers will cease as soon as you raise the proposal for termination.
However, the surrender value is paid solely at the end of the lock-in period term. Also, if you break the ULIP before the lock-in period of five years, you will not be paid the total amount. There are certain deductions and discontinuance charges applied as per rules and regulations.
How Much Return Can I Expect in ULIP?
As per industry specialists, one must stay invested in schemes like ULIPS for the long term. Ten years or above can be a reasonable period of investment. Over a long duration, you can expect the best ULIP plans to generate 10%-12% returns.
If compared, the returns from ULIP plans are much better than those from fixed deposits, Equity Linked Savings Schemes (ELSS), and other tax-saving funds. Furthermore, ULIPs are also known to offer better returns than government-based investments. Be it a Public Provident Fund (PPF) or a National Savings Certificate (NSC), the best ULIP plans beat their returns.
Inflation trends are known to affect and impact several schemes’ returns negatively. To escape the negative impacts of inflation, you can consider investing in ULIP plans. The best ULIP plans can beat the harmful causes of inflation on return schemes. Also, you can choose the funds that you wish to invest in. For example, the Tata AIA ULIP plan offers you a chance to choose between 11 different fund options, and you can also switch funds when needed.
Conclusion
Conclusively, while investing in a ULIP, you avail of dual benefits. You insure your life and invest your money to grow. This combo life insurance parts your money into two and helps you make the most of your investment. Thus, understand the pros and cons of the plan and choose the right path to accomplish your financial goals.