Choosing the best ULIP in India

In this generation of unpredictability and uncertainty, life insurance policies guarantee an agreed-upon sum in case an untowardly proceeding takes place. However, it was soon realized that a small majority of people were more interested in savings and returns during their lifetimes rather than pay a premium towards a plan that only guarantees a sum assured in the event of uncertain death.

This loophole led to the advent of ULIPs that combined the best of both worlds and optimizing profits without having to invest in two different policies. 

What is a ULIP, and how do they work

A ULIP, short for Unit Linked Insurance Plan, is a hybrid between insurance and investment, hence offering you benefits from both segments with flexible options, in effect providing you with a life cover and diversifying your investment for better returns.

What a ULIP does is create a base insurance plan tailored to the needs of the potential policyholder, and provide an additional feature of investing your premiums, just like a mutual fund, in the market to plan your future financial goals strategically.

Unlike standard insurance policies, ULIPs are open-market based investment plans, and based on market performance; the policyholder reaps its benefits. However, contrary to popular belief, ULIPs are not full-fledged stock market investments, and, in a way, grow steadily and minimize risks subject to stock market volatility wherein a small portion of your premiums are set aside towards life insurance. The rest is invested.  The best part about this is that the policyholder does not have to involve himself/herself in the “where to invest” part. 

What are the risk factors involved

Although the risk factors are not as high as stock market investments, the “Where to invest” segment is customizable depending on the policy holder’s risk appetite. If the policyholder wishes to minimize risk and does not expect sudden bursts of profits and would instead go for steady growth, he/she may choose to invest in low-risk debt funds. Equity investments are better suited for investors who are aggressive with their investments. 

Do ULIPS qualify for tax saving benefits

ULIPS are exempted from tax under section 80C of the Income Tax Act, 1961. Similarly, the pay-off amount upon maturity is exempted under section 10(10D) of the Income Tax Act. 

What establishment should I opt to invest in a ULIP

There are a plethora of choices available for an investor in the markets today. Touted as one of the best investment-linked insurance providers in the country, Edelweiss Tokio offers you a range of ULIP options to choose from based on your requirements to suit your needs.

With low premiums and strategically designed flexible payment schedules, Edelweiss Tokio makes sure you are protected at all times.

The company also gives you the flexibility of switching between funds based on circumstantial dynamic changes so that you do not miss out on optimal conditions and better performing funds at any given point of your tenure.

Happy investing!

 

 

International Mutual Funds can provide good returns if strategically chosen

International mutual funds can pay off in terms of good returns in the long run, provided the investment strategy is right. Overseas mutual funds are the ones which make investments in foreign entities or companies. They are also called foreign investment mutual funds in some cases. These may come with higher exposure to risks although the chances of obtaining attractive returns may also be higher. Mostly, these are preferred as good long-term investment alternatives. 

Diversifying the portfolio is a must for hedging returns against market risks and taping into new opportunities for earning good returns. Investing in international mutual funds will not only enable greater portfolio diversification, but will also help in lowering losses and gaining higher returns since economic market cycles vary from one country to another. Hence, investments made simultaneously in different markets can pay off in the long run. 

What should you keep in mind while investing? 

Mutual funds investing overseas require you to be a careful and involved investor. They are not suitable for those who are mostly passive investors since there is an element of consistent and continual tracking of markets across the world. Those investing in international mutual funds should be absolutely certain about their investment objectives across both short and long durations beforehand. The track record of various global funds should also be carefully ascertained prior to investing.

Mutual fund foreign investments usually come with specific risks linked to fluctuations in rates of currency exchange. For example, if the fund is majorly investing in the USA market, then if there is a fall in the rupee value, then you will have higher rupees for every dollar you have invested in. Similarly, if the rupee value goes up, then there will be fewer rupees available for every dollar that you have invested in. In the latter scenario, the net asset value (NAV) will come down while in the earlier scenario, it will naturally go up. At the same time, you should also keep in mind that economic and socio-political changes and decisions in several global economies may impact performance of mutual fund investments. Hence, keeping a tab on market trends is a must for investors in international mutual funds.

Should you invest?

By tapping into multiple global economies, you may garner higher returns for the long haul while diversification of the portfolio also spreads out the risks considerably. However, you should make sure that you conduct thorough research on the funds you are interested in, their performance and the returns they are providing, before signing on the dotted line. Keep in mind taxation issues as well since hybrid funds majorly invest in companies in the domestic market and the remaining portions in global markets. As a result, returns garnered from the same are mostly subject to LTCG (long term capital gains) taxes.

However, international mutual funds have historically performed well over the years as per several reports. You should select plans across markets where the stock markets are properly developed and zero in on those markets which have suitable corporate governance. Invest in countries which have solid legal systems and solid, long-term businesses.