Not only do ULIPs assure a certain risk cover for the policy holder's beneficiaries, they also provide them with the option of selecting high, medium or low risk investment options, while also allowing the insured to switch between the same.
Switches can be made at no cost,provided they are limited to a predetermined number.
Policy holders can either adopt aggressive investment strategies, gearing their investments towards lucrative equity markets, or in case of low-risk investors, in bank deposits and debt securities. ULIPs also allow for 'top ups', which means that the policy holder can make additional contributions over and above the regular premium.
While they are long-term investments, ULIPs offer policy holders the option of making a partial withdrawal after the first five years. Only the stipulated minimum amount of capital must be retained in the policy holder's Unit Liked account. This lends ULIPs a certain degree of liquidity which many other long-term investment options lack, giving it a significant edge.
Unlike simpler term life insurance policies, ULIPs hold a significant 'cash value' as they provide the policy holder not only tax benefits but also an assured return at the time of maturity.
ULIPs are viable options for investors who wish to partake in investment activities without actually buying into the stock market, with the added benefit of risk cover in the unfortunate event of the insured individual's demise. This two-fold benefit is the reason for the rising popularity of ULIPs in today's capital market.