Risk-Averse Investors Should Invest in ULIPs

In the world of investments, risk and returns go hand in hand. Therefore, the higher the risk, more is the return on investment.

Regarding market-linked investment products, equity funds are a riskier proposition than debt instruments, and therefore, you have a better chance of drawing richer profits through equities. That said, only a handful of Indian investors have the financial disposition to go for a high-risk, high returns portfolio. Majority of them; are instead inclined towards playing it safe or being “risk-averse” when it comes to investing in market-linked instruments, especially equities.

Subsequently, risk-averse investors either fall for sub-performing instruments that are relatively unaffected by market volatility or end up buying plans that only offer a life cover with no proposition for wealth creation, similar to pure term insurance policies. Wouldn’t it be nice if we told you that there is a way, where you can invest your money in the equity market and reap handsome dividends while ensuring financial security from the uncertainties of life? That’s where a ULIP comes in. With ULIPs, you can avail the dual benefit of long-term capital gains and life cover for your loved ones. Here’s how you should look to invest in a ULIP plan.

Know Your Risk Appetite

ULIPs allocate varying portions of your money into investment channels such as money market instruments, equities and debt instruments. Therefore, you should choose the asset classes to invest in, after carefully deliberating on your investment goals, age, asset’s performance history and premium percentage allocation.

With ULIPs, you also have the option to switch from one asset class to another or change the percentage allocation according to the existing market trends. Therefore, investors who have invested primarily into debt funds may allocate some portion into equities once the market sees an upswing. Similarly, during recessionary periods, you can move all the investments from equities to relatively safer money market instruments.

Go Long-term

ULIPs are most rewarding when you invest in them for a long term. These plans have a lock-in period of five years. Therefore, returns from ULIPs can help meet essential life goals such as marriage, higher education or buying a home. Once the lock-in period expires, you are eligible to make partial withdrawals from the accumulated fund. While the withdrawals come in handy to meet smaller financial needs, you can use the huge amount, received upon maturity, to achieve long-term life and family goals.

Be Prepared for Market Volatility

Unlike investment returns from traditional investment products, the maturity proceeds and returns from ULIPs are relatively less affected by market volatility. This is possible due to the switching option available under the plan, which allows you to minimise the risk by varying the fund allocation between equity and debt. Even though, the net asset value (NAV) of the available funds under ULIP changes daily (subject to market variations), long-term ULIP investments help you reap rich investment benefits from it.

This happens for two reasons. First, the various charges applied to your investment by the insurer during the lock-in period, reduce considerably once the period is over. Second, your investment gets a reasonable chance to recover from any depreciation incurred during the recessionary periods.

Know About Different ULIP Charges

The insurance regulator IRDAI has capped the various charges levied under ULIP plans. However, your yields are affected by charges such as those of mortality, policy surrender, fund allocation, and policy administration. Therefore, it is vital that you are fully aware of the various ULIP charges that would be levied throughout the investment tenure and how they would affect the capital gains in the long-term.

Moreover, you must make a comparison of the levied charges at the time of purchasing the ULIP plan and pick the one that has the lowest cost structure. For example, you can opt for ULIPs such as Future Generali Easy Invest Online Plan, which offer zero switching charges (for up to 12 switches in a year) and zero partial withdrawal charges (for up to four partial withdrawals in a year.)


When we ask for investment advice from our parents, friends or relatives – anyone who is predominantly risk averse, all we hear about are conservative options such as Bank FDs, PPF, post office savings schemes, NPS, or traditional insurance products. These investments; however, only offer zero to little avenues for wealth creation and investment returns that hardly rise above inflation.

Unlike any other investment option, ULIPs are one financial instrument that bridge the gap between protection and investment, while offering excellent opportunities to save tax, diversify your investment portfolio among other distinctive ULIP benefits. At Future Generali, you can find ULIPs that are specially catered to your long-term investment and insurance goals. We understand how precious your money is and therefore, we can help you make the most of your investments.