What are The Types of ULIP Plans and Which One Should You Buy?

ULIPs have gained popularity in recent time due to the many benefits they offer. With growing awareness, more and more people are turning towards ULIP to meet their financial needs. Owing to the flexibility and the many advantages, CA and financial planners too are recommending ULIPs. There are many types of ULIPs in the market that you can use to attain your life goals, both near term and long term. Each of these types of ULIP is designed, keeping a specific set of investors in mind. We tell you about some of the most popular types of ULIP plans and who should buy them.-

1.Equity funds- This typeof ULIP funds invest in high-risk instruments like equities and company stocks. The returns on equity funds can be the highest amongst all types ofULIPs. These funds are for those who can afford to take risks.

2. Who are they for?​ - If you are young or starting early and you are not averse to playing it boldly, you can invest in equity ULIPS. Though the risk is more, you stand a chance of earning better returns.

4.Who are they for?- If your risk profile is intermediate, you can go for fixed interest funds. The risks are lesser than those in equity funds, but the returns can be significant.

5. Cashfunds- These ULIPs invest your money in cash and bank deposits and other money market instruments. These are the avenues with the lowest possible risk. Hence, cash funds carry the least risk. Invest in these fund of you are looking for something with zero to little risk. However, you should know that the returns too are very low. 

6. Who are they for? - Cash funds are aimed at those who cannot afford to take risks, yet are looking for wealth-generating opportunities.

7.Balancedfunds - Balanced funds are ULIPs that invest across asset classes. Typically a balanced fund contains stock and a bond component in a single portfolio. It can even have a money market component. These ULIPs are known as balanced funds as they balance the equity and debt components, thus striking a balance between growth and income. 

8. Who are they for? - These funds are for those who want safety and a steady source of income, along with a modest wealth-generation opportunity.

ULIPs are some of the best investment tools as they provide wealth generation opportunity in addition to providing you life cover. Another benefit is that you can switch and redirect your funds to leverage the market shifts and earn better returns. You can ride out the market swings by moving money from equity to debt funds or vice versa. You can build your portfolio to include a healthy balance of equity and debt funds according to the market condition. You can choose from the various types of ULIPs available in the market that suit your needs. These benefits make ULIP an essential tool in financial planning.