Top tips to generate high returns from ULIP

The primary goal of investments can be to provide returns on investment. Since many of you might wish to receive more returns, you might look for investment tools that can offer relatively high returns as compared to other financial products, such as Mutual Fund (MF), Provident Fund (PF), Equity Linked Savings Scheme (ELSS). Although a ULIP policy can provide high returns, it can get tricky since it is linked to the market. Let’s go through the top five tips to generate high ULIP returns:

  1. Asses your risk appetite

Risk appetite can be an essential element that can determine the rate of your returns. Since your investing habits can differ from another individual, you should consider your risk appetite. Ideally, your risk appetite can vary from high or low. Moreover, your risk appetite can depend upon your age, financial responsibilities, and selection of funds. As an investor, you should analyse your risk appetite if you wish to receive relatively high returns from a ULIP policy.

  1. Choose the right ULIP fund

A ULIP policy can provide you with two main types of funds that are as follows:

  • Equity funds

Equity funds are a risky investment option. Since the generated returns can be linked to the market, you should opt for equity funds when the market performs well. If you have a relatively high-risk appetite at a young age, choose equity funds to get better returns.

  • Debt funds

Unlike equity funds, debt funds might be less-risky options. Due to the low involvement of risks, you can expect minimal returns from debt investment. Ideally, you should invest in debt funds when your financial responsibilities towards your family increases.

  1. Avail the switching feature

A ULIP policy can be a flexible option for investment. Apart from choosing ULIP funds of your choice, you can switch between equity funds and debt funds based on market performance. As a policyholder, you can shift from one fund to another with the help of the switching feature available under a ULIP policy.

The switching feature can allow you to secure your invested capital as well as diversify your investment portfolio. For instance, you can choose debt funds when the market is down and switch to equity funds when the market bounces back. The switching feature under a ULIP policy might have additional charges. Therefore, confirm with your insurer about the applicable switching charges.

  1. Consider the market scenario

Market volatility can be a major part of your ULIP plan. Being a market-linked financial product, you should consider the market scenario before a ULIP investment as well as monitor the performance of your ULIP funds after an investment.

A part of ULIP policy can contain investment. Since the investment element can be market-linked, you should consistently stay updated with market performance. The key to successful ULIP investment can be to analyse the market scenario closely to reap the benefits of ULIP returns on investment.

  1. Stay invested for a long time

A ULIP policy can have a lock-in period of five years. During the on-going lock-in period of five years, you might not be able to withdraw your ULIP funds. Although a ULIP policy is a long-term investment, you should stay invested until the completion of the lock-in period to reap the benefits.

When you stay invested for a long time in a ULIP policy, you can receive high returns from your ULIP investment. The high returns from the ULIP policy can allow you to save more money as well as combat the impacts of inflation.

As highlighted above, returns can be an essential aspect of the ULIP policy. However, the rate of returns can depend on the following things mentioned above. While receiving high returns can be your primary concern, you should not overlook the other benefits of a ULIP policy. A ULIP investment can be flexible, affordable, and convenient. However, use a ULIP calculator to determine the premium value before purchasing a ULIP policy.