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    4 Reasons to Continuously Monitor Your ULIP

    Published on August 27, 2019

    What is a ULIP Fund?

    At times, equity ULIP funds are not able to manage the market downfall, as it is a market-linked fund. It can negatively impact your current returns and your overall ULIP performance. However, the investment risk in a ULIP Plan depends upon your fund choices. Under a ULIP Policy, a policyholder can select from equity funds and debt funds, based on his risk appetite. When you are not aware of the fund-switching feature, you won’t get the best returns possible out of your ULIP Plan. Therefore, it is necessary to keep a tab on the performance of your ULIP fund. If you monitor your ULIP performance, you will mitigate any risks as well as uncertainties that will hamper your financial stability in the future.

    Below are four reasons to continuously monitor your ULIP performance:

    1. To avoid future risks

    It is important to monitor your ULIP regularly as the whole risk of investment is borne by the policyholder. The investor takes the decision of investment based on his risk. ULIPs have many segregated fund options from which you can choose. While equity funds are for an aggressive investor, the debt funds are for risk-averse investors. Therefore, selecting only the type of funds that matches the risk appetite of an investor is advisable.

    1. To avail switching options

    A ULIP investor can select and invest in the choice of their ULIP funds based on market value, risk appetite, and time horizon. The investor can also switch their investment from one fund to another. On investing in ULIPs, switching from one segregated fund to another is easy. It is possible to make switches four times to unlimited per year. However, it depends on the plan you’ve chosen. Keep an eye on the past performance of the funds, the market outlook and your own situation before considering the switching option.

    1. Automatic Switching

    You can opt for a balanced fund option or a “Wheel of Life” portfolio strategy if you are not market savvy. Considering the view of the market, the insurer’s fund manager switches between equities and debts in an asset allocation fund or balanced fund.

    1. To meet long term objectives

    An investment like ULIP is a long-term investment. Since a ULIP Policy comes with a lock-in period of 5 years, the policyholder tends to develop the habit of disciplined investment.  When you invest in a ULIP, don’t think of it as a short-term investment and surrender it in a rush. The longer you stay invested, the higher is your growth of funds. However, you must monitor the markets very carefully, and then pick the right opportunities. When there is a market correction, purchase more units at a lower Net Asset Value (NAV). Once the market bounces back, you’ll be rewarded with higher returns. It is best to consult your financial advisor before making such descisions.

    Keeping these reasons in mind, be sure to check your NAV and fund performance daily. Reallocate your units from one fund option to another in case your dissatisfied with your current ULIP performance. Start doing it regularly and soon you’ll notice an increase in your fund value.

    It is important to know everything about your investment in a ULIP. In addition, monitor and look for the top performing ULIP fund options available under your plan. Monitor your ULIPs very seriously if you wish to achieve substantial returns in the long run.

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