A ULIP or Unit Linked Insurance Plans are financial products that combine the benefits of insurance and investment. By investing in such plans, you safeguard yourself and your family with life insurance and the money is also invested in market-linked funds. These funds are managed and invested in asset classes like equity and debt.

The ULIP also provides flexibility in terms of premium payments and fund allocation that allows you to customise your plan as per your financial objectives and risk tolerance. Usually, these plans have a five-year lock-in period.

How does ULIP combine insurance and investment?

ULIPs combine insurance and investment by allocating a portion of premiums to life insurance coverage, assuring financial security for the policyholder’s family, and the rest is invested in chosen funds for wealth creation.

The allocation of funds depends on the policyholder’s preferences and fund management strategies. This dual approach helps attain financial goals while also providing a safety net. However, the policyholders can change funds based on their goals.

What is a ULIP calculator?

It is an online tool that helps investors to calculate their premium payments and expected returns based on their investment horizon, risk and financial goals. The plan takes several factors into account, like the amount you wish to invest, expected rate of return, policy tenure and others. With these specifics, investors can analyse expected investment growth and select a preferred plan.

For more insights and to access various investment calculators, visit CNBC TV18 Investment Calculators.

Types of ULIP Funds:

Unit Linked Insurance Policy plans offer diverse fund options such as equity, debt and hybrid funds.

Equity funds: In this, the premium is invested in equity or equity-related securities. These are high-risk but offer higher returns and are good for long-term goals.

Debt funds: Here, the premium is invested in fixed-income instruments like bonds that provide stable returns with lower risk.

Hybrid funds: This is a mix of equity and debt funds that balances both risk and return. These provide moderate growth potential with stability.