Finances & Money

Insurance Plans of Tomorrow: Can Insurance Be An Investment at the Same Time?

Do you have life insurance? If not, what’s holding you back? For some, they view life insurance as not being worth the cost because they don’t directly benefit from it. The prospect of looking after loved ones after they’re gone is just too far removed from the life they’re living in the moment. But when your life insurance is also an investment, you can get something out of it while you’re alive.

What are ULIPs?

ULIP stands for United Linked Insurance Plan. ULIPs are made up of two products: a life insurance policy, and a market investment. So instead of paying a premium on life insurance alone, you’re putting money toward your policy, and also an investment opportunity that could be profit-bearing.

With policy opportunities moving online, opting for an ULIP can save you money as well. They typically come with tax benefits and advantages, and thanks to the lock-in period, you’ll have no choice but to save money. This is especially key for those who have trouble tucking a portion of their earnings away.

Of course, plans like this have to come with extra fees and charges, right? Sure, but this is another benefit of the move to online operations – the charges might be a good deal lower than you anticipated.

Finally, people love the flexibility that they get from ULIPs. Not everyone can be a market whiz, and those who get nervous about their investments will be comforted by the option to switch when investments aren’t performing to your expectations.

Are ULIPs a Good Investment?

Because ULIPs are a relatively new concept to many people, it’s easy to get caught up on any of the many myths we hear about them.

One criticism you might hear is that ULIPs are too permanent, and you’ll be stuck with it. This is true only if you consider five years “permanent”; after that five-year lock in, you can move on if you wish.

There’s also concern that the life insurance component will somehow be subpar if your investment plan is thrown into a suddenly uncertain market. But this is nearly never the case. In the event of your death, your carrier should pay the full amount outlined.

While the switching option may be a big draw, people worry that it will cost them. This too is easily debunked, with many carriers allowing you to switch for free a certain number of times in a 12-month period.

It is true that you should have your eye on the long-term when using an ULIP. The growth opportunity is very real, as you can increase what you invest when all is going well. This is called a top up premium, and its benefits are exclusive to ULIP holders who want to grow more value.

Ultimately, misconceptions about ULIPs are just old news. They’ve changed quite a bit over the years, and are gaining in popularity as a more diverse, flexible way to invest and maintain insurance coverage at the same time. So if you’re concerned that a regular life insurance policy just doesn’t hold enough value and flexibility, united linked insurance plans are where it’s at.

About AEGON Life

A joint venture between AEGON – world’s leading financial services and Bennett, Coleman & Company – India’s leading media house, AEGON Life Insurance launched its pan-India operations in July 2008. Armed with a vision to be the most recommended new age life insurance Company, AEGON Life adopts the power of global expertise by leveraging digital platforms to bring transparent solutions, and to prioritize customer needs. Our financial planning and investment solutions include term life insurance plans, pension plans, unit-linked insurance plans (ULIPs), health insurance plans, child education plans, and more.


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Susan Paige

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