Not to worry about market volatility with ULIPs

United-linked Insurance Plans, or ULIPs, have turned out to be a popular investment as they provide the features of both insurance and investment under a single integrated plan. It is a combination of investment and insurance — a portion of the premium is used to provide insurance coverage to the policyholder, while the remaining part of the premium is invested in debt and equity instruments to for maximised returns after a specific period.

However, there’s particular fear which runs in the minds of young investors — the fear of the market volatility. It is this fear that prevents numerous investors from turning their hard-earned cash into fruitful returns that are tax-efficient in the long run.

Even though predicting the nature of equity markets that go up and down due to numerous factors is a tough task, there are certain key points one should take care when it comes to investments in ULIPs.

Following a disciplined approach to investment

To make real and regular gains in the equity market, it is important that you follow a disciplined approach to investment. You must make regular investments over an extended time, without bothering too much about the ups and downs of the market.

This approach works best in the long run by averaging out the loss incurred during the investment period, employing the cost of Rupee Cost Averaging.

Rupee Cost Averaging is an investment technique where you invest a fixed amount of money at regular intervals. This method of investment ensures that you buy more shares when the prices are low, and less when they are high.

A flexible payment mode

ULIP programmes are designed in a way where you learn the approach of long-term investment and inculcate the discipline which is required in it. It has a minimum lock-in five years, so the investors are engaged in it for a slightly longer period.

ULIPs offer monthly, quarterly, half-yearly and annual modes of payment for investors. For retail investors who look forward to investing regularly, a monthly plan comes out as the best option as it fits well in the budget and minimises loss factors since the payment is spread out across a longer time, diluting the risks that come with short term extreme market movement. Know how risk averse you should be while investing in ULIPs

Noticing the recent trends

According to a report published in The Times of India, the fears of bear market stand “unwarranted”. The Indian market must fall by another ten percent to be considered bearish, the report added. However, that can only happen if the market sees a major global crisis coming.

For example, consider the market volatility at the time of the by-elections in Uttar Pradesh and Rajasthan, or even around the general elections, showing how the political and economic fluctuations around affect the market. Such market fluctuations also allow you to review your portfolio — checking whether the gaps in your equity exposures are too wide. If the gap is too wide, you can trim down on your equity exposure.

However, the dynamic nature of the market is constrained by the holding period. An increased holding period maximises that chances of positive results in the ULIPs portfolio substantially. For example, consider you have invested for 10 years in a row, and all the years have yielded positive returns except one. Such a trend in your investment portfolio will see your earnings going up since you have more positive figures on your side.


The only way for investors to make the best out of equity markets is to invest constantly without having to worry about the market being bullish or bearish. Market volatility is a meta trend and it balances itself out in the long haul, and fluctuate around the time when economic policies are affected, such as the elections.

The key here is to direct the investment in such a way where it beats the volatile nature of the market — to keep yourself invested in it in the long run so that you can diversify your portfolio and gain maximum returns. Besides, the number of features that come with Future Generali Big Dreams Plan , such as switching and top-up, aided by the insurance premium, only gives this investment plan a wholesome and comprehensive approach.