As with any investment, it’s important to track the performance of your ULIP to ensure that it is meeting your investment goals. But how can you track the performance of your ULIP plan? Read to find out.
ULIPs (Unit Linked Insurance Plans) are investment instruments that provide the dual benefit of insurance and investment. They offer a range of investment options like equity, debt, and balanced funds. Unit Linked Insurance Plans have become a popular investment option for people looking for a combination of insurance coverage and investment returns. However, as with any investment, it’s essential to track the performance of your ULIP plan regularly and here’s a guide on how to do it
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Know Your Fund Options
ULIP plans typically offer several fund options, ranging from equity funds to debt funds. Therefore, it’s vital to know the different types of funds available and the level of risk they carry along with their return potential. For example, equity funds may carry a higher return potential, whereas debt funds are known for their lower risk. Therefore, knowing each fund’s return potential and risk level can help you make informed decisions.
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Review Asset Allocation
Asset allocation refers to the distribution of funds across different asset classes, such as equity, debt, or a combination of both. You can review your asset allocation regularly and rebalance your portfolio if required. For example, you can allocate a significant portion of your ULIP plan towards equity funds when you’re young and have a higher risk profile. As you age, you may like to increase the debt percentage in your fund. However, avoid switching funds too frequently based on short-term market trends.
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Monitor Fund Performance
Once you have invested in a particular plan, monitoring its performance is crucial. So, check the performance of your plan against relevant benchmarks. Also, compare their returns with other funds in the same category. This can help you evaluate whether your fund is performing right.
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Use ULIP Calculator
You can use the free online ULIP Calculator to determine better the investment amount and the tenure based on the expected return rate.
You can also use the ULIP calculator to gauge the present performance of your plan. Enter your present investment amount, policy term, and the current interest rate provided by the ULIP. If the probable return shown aligns with your expected returns, you’ll know you’re on the right track. On the other hand, you may consider increasing the investment amount if you expect more returns and believe in ULIP’s future performance.
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Track Costs
ULIP plans come with various costs like fund management charges, administration fees, premium allocation charges, etc. While some of these charges are deducted upfront, others are levied annually or periodically. These charges can have a significant impact on your investment returns. So, review the charges and fees associated with your plan regularly.
ULIPs are long-term investment options. So, it’s vital to stay invested for the long term to reap the maximum benefits. Similarly, take a broader approach while tracking a ULIP’s performance. You should consider the performance of a ULIP plan over at least three years or more before concluding. Most importantly, keep your eyes firm on your long-term financial goals while investing in a ULIP.