With equity markets on a new high and with an expectation for it to soar further, Unit Linked Insurance Plans, or,┬аULIP provide a cost-effective way of entering the equity market. They not only offer a professionally managed investment-cum-protection platform but also provide an entry point into the growing equity market. Alongside equity, investments in highest rated debt instruments also make Ulips a perfect choice for investors who are looking for a long-term investment instrument that offers features like transparency and flexibility.┬а
ULIP offer an array of fund options with different asset allocations that meet the requirements of policyholders with different risk appetite. While leaving the fund management to experts may be the best option, some customers are particularly savvy and would like to monitor their fund movement. Ulips offer several options to customers in order to provide complete access to invest their premiums in a well-established suite of investment funds of Insurance companies, ranging from 100% debt to 100% equity.
Optimizing Asset Allocation┬а
The primary determinant of risk and return in a portfolio is asset allocation. By spreading investment across different asset classes, investors can create a diversified portfolio where the loss that one may make in a certain asset class can be compensated by the profits that are made on another. Thus, you reduce the overall risk of your investments.┬аKeeping this in mind, Ulips offer policyholders the option of free switches between funds, so that they can effectively manage their portfolio asset allocation.
Using free switches, the policyholders can move their investments between various asset classes like cash, debt, and equity, depending on their risk appetite and financial goals. Policyholders can benefit from switching strategies as appropriate switches can take advantage of the movement of asset prices resulting from changing┬аfinancial and economic conditions.
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