The COVID-19 pandemic has brought a myriad of changes. The post-pandemic world is trying to grapple with these changes as one sees a shift in the way individuals work, take care of their health, their relationships, and, more commonly, their finances. The insurance industry, also, has seen a renewed popularity. More and more people are waking up to the benefits of life insurance. The relevance of having a huge corpus for one’s loved ones in the event of an unfortunate demise has grown positively. However, people want more than just the conventional insurance plan. This may explain the rise in importance of ULIP during the COVID 19 pandemic as well as for life cover.
Reasons for the popularity of ULIP
We take a look at a few reasons ULIPs have become a preferred choice for many since the time the COVID-19 pandemic has affected the world.
A ULIP provides life insurance + returns
What makes a ULIP different from other insurance or investment products is that it combines the features of both into a single policy. You have to pay premiums like in any life insurance policy. The premium is then utilised in two ways by the insurers – to construct the life cover, and for investment in market-linked instruments. The investment aspect works similarly to mutual funds – the premiums of multiple policyholders are invested as a lump-sum in instruments and your share of the profits depends on the amount you pay as the premium. To get an estimate of the premium and its plausible returns, you can take the help of a ULIP return calculator.
Thus, a ULIP provides a chance to gain returns depending on market performance while ensuring that your loved ones are being secured as well. This unique combination can be very helpful in assuaging the financial uncertainty that the pandemic has ensued.
Buying ULIPs is now easier than ever
The pandemic has also increased the level of digitalisation across the globe. From classrooms to board meetings, digital is the new norm. This has also led to many insurers introducing a completely digital insurance buying procedure, even for complex products. Digital procedures introduced earlier, were simplified even more for the usage of everyone, whether it was a 30-year-old or a 65-year-old customer.
This ensured that individuals looking to buy a ULIP online could so – without stepping away from their house, right from the comfort of their couch.
Millennials’ knowledge of finance has increased
The pandemic has led to the emergence of the new-age young investor. This investor is well-aware of new trends in finance and is positively eager to use this knowledge to gain returns. Armed with finance apps, social media finance influencers, and free online resources, they are prepared to use their money in as disciplined a way as possible.
At the same time, faced with increasing uncertainty, these investors are looking for security as well. They want themselves and their loved ones to be monetarily prepared in case something unfortunate occurs. This can be one reason for young Indians buying a ULIP for wealth generation and security in high numbers.
ULIPs are suitable for all types of investors
A ULIP offers the investor the opportunity to choose between equity funds, debt funds, and a balance of both, depending on their risk appetite. Risk-averse individuals can opt for debt funds, while those with higher risk capacity can opt for equity funds. A combination of both is also available. A ULIP calculator can help you understand the returns that investing in each kind of fund may bring to you.
The COVID-19 pandemic has also seen extreme fluctuations in the market. Investing completely in equity funds may not seem like a good idea to some. Since a ULIP offers the chance to switch funds from one asset class to another multiple times in a year, the chances of suffering losses from market volatility reduce. This feature has also led to many investors opting for ULIPs.
If you too are interested in investing in ULIPs, ensure to research the product and the insurer thoroughly. Go through their features, customer services, reviews, and so on. Whether you buy a ULIP plan online or offline, remember to read the terms and conditions of the policy thoroughly.
