ULIP Risk Xplorer Tool: A step closer to get your #LifeGoalsDone
The decision to buy a unit linked insurance plan (ULIP) to meet important life goals like child’s higher education and your retirement is an important one. After all, there are many investment alternatives to choose from. But the combination of life insurance and an investment makes ULIP policy a compelling investment option.
Besides providing financial security to your family in your absence, ULIP allows you to benefit from the high growth of equity investments. Added to these two advantages is the advantage of annual tax deduction of upto Rs 1.5 lakh available under Section 80C. However, even after you decide to invest in ULIP, you still have the job of investing in the “right” ULIP.
Most life insurance companies offer a range of fund options with ULIPs. Depending on your appetite for taking financial risks and other factors like your understanding of financial markets, you may select the right funds for your investment. While a financial advisor or a financial expert can help you, what if you want to have a good idea by yourself to make an informed decision?
Buy ULIP according to risk appetite
The good news is that Bajaj Allianz Life Insurance Company is now providing the Risk Xplorer feature with its new-age ULIP plan, Goal Assure. Before we talk of Risk Xplorer, allow us to briefly introduce the product.
Bajaj Allianz Life Goal Assure, a new-age ULIP, provides one-of-Its-kind benefits to the investors. The product guarantees return of life cover charges on maturity of the policy as a reward to the policyholder, for outliving the maturity period and achieving life goals. If you opt to receive the maturity benefit in instalments over 5 years (and not lump-sum), you get a return enhancer of 0.5% of every due instalment. In addition to this, the product also offers fund booster and loyalty additions for paying premium regularly and staying invested in the policy for 10 years and above. It also allows policy holders to choose among 4 portfolio strategies and make unlimited switches between funds (from 8 available funds). Policyholders can also avail Tax Benefits under Section 80C and Section 10 (10D) of the Income Tax Act.
How Risk Xplorer works
Risk Xplorer has a risk calculator that asks you a set of six questions and suggests the right ULIP fund based on your answers. The questions revolve around areas such as your preferences for investments, returns, understanding of financial markets, among other things. The user friendly calculator suggests the right fund based on your risk appetite. You also have the option to make your own choice for investing in funds
How Risk Xplorer helps achieve #LifeGoals
- Pick the fund with the right risk level: For long-term goals such as child’s higher education, child’s marriage and retirement you will need to ideally take the term of 15 years or more when buying Goal Assure. This is to substantially enhance the chances of getting the most out of equity investments which reward you for periods of 10 years or more. With the help of Risk Xplorer you can consider choosing top performing ULIP funds with the highest portion of investments in equity.
- Consider topping up your investment: As you pay regular premiums, you can choose your premium payment frequency as monthly, quarterly, half-yearly or annually. You can consider making additional investments through the top up facility. This situation will typically arise after pay hikes or receiving windfalls like bonus and refunds.
- Step up momentum during policy term: If you receive a pay hike during the term and you had initially opted for a high risk fund like Asset Allocation Fund II, use Risk Xplorer again to find out if you can move up higher in the risk ladder. You may well find a suggestion of moving on to a very high risk fund like Pure Stock Fund. You can then use the switching option for the growth of your investments.
- Secure gains during end of term: As you approach the end of the term for Goal Assure i.e. 2-3 years before maturity of the policy; you can gradually start switching to lower risk funds. For instance, you can move to moderate risk Bond Fund initially, and then to Liquid Fund in the last year of the term. The Risk Xplorer is likely to suggest a similar course for you. The idea is to secure the gains your investments have made over the years and no adverse equity market situation impacts your final savings amount.
While it is true that one needs to embrace some level of risk to get the long term growth of equities, it need not simply be a leap of faith. With the Risk Xplorer, you ensure that you take up the risk that you are comfortable with and that your progress never turns its course.