What is Fund Switching & Factors to Consider Before Doing It| SBI Life
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All you need to know about Fund Switching in ULIPs

Insurance Basics & Financial Advice Fund switching is a feature of ULIP which enables the policyholders to shift their money from one fund to another within the same plan. Policyholders can choose the fund as per their financial goals and risk tolerance.

All you need to know about Fund Switching in ULIPs

6 Minute |

Fund Switching

Fund switching is a feature of ULIP which enables the policyholders to shift their money from one fund to another within the same plan. Policyholders can choose the fund as per their financial goals and risk tolerance.

A thing to keep in mind is that insurance companies allow limited switches. There are charges applicable for every switch after a certain number.

Why would you switch funds?

Fund performance varies according to market conditions. If the fund that you have chosen is not performing upto your expectations, you can move your money to a fund that could fetch you better returns.

Hence, you should track the performance of ULIPs to understand if the fund performance is up to your expectations.

Key Factors to consider before fund switching

Risk Appetite:

Your capacity to take risks should be the first factor that you must consider before switching funds. Accordingly, you can choose debt or equity funds.

Speak to a financial advisor or expert to understand your risk appetite.

Financial goals:

Switching your funds should depend on your long-term financial goals. Example, equity funds may be more volatile for your short-term goals, but they may be perfect for long-term goals. You can choose an equity fund at the start,to grow your wealth and then consider moving your money to debt funds as you inch closer to your goal, asdebt funds are relatively less volatile than equities.

Life stage:

Individuals in different life stages have different priorities. So, if you are a young person with fewer liabilities, you can choose to take more risks. However, as you get older, your risk tolerance can decrease. So, you can switch funds also depending on your life stage.

Fund switching is one of the best features of ULIPs. It allowsyou to maximise your gains. However, it is important to consider your risk appetite, financial goals, and life stage before switching from one fund to another.

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