Is ULIP a Good Fit for Senior Citizens Who Want Market Exposure?

Financial security is a necessity in today’s growing economic crunch. The volatility in the market is affecting everything around you. This is a particularly difficult situation for senior citizens. The challenges of a stable income after retirement are becoming harder to obtain.

In such times, ULIPs can be helpful solutions to tackling life’s many demands, while ensuring financial stability for you and your loved ones.

What are ULIPs?

Ulips are Unit-linked Insurance Plans that allow you to avail of the benefits of a life insurance plan along with an option to increase your net worth. These are insurance plans that benefit your beneficiaries after your demise, but also allow you to increase your income during your lifetime.

Much like any life insurance policy, you must select a policy tenure and sum assured for the plan. The sum assured is the amount that will be paid to your ones assuredly in the event of your demise within the policy tenure. Once you make the basic selections, you will have to select whether you also want to invest some money in the market.

The insurance provider will calculate the total premium that comprises assured investment for a specified sum assured, as well as an amount designated for market investments. You can use a ULIP calculator to determine your total investment and secure your own finances as well as your beneficiaries.

What is a ULIP calculator, and how does it work?

A ULIP calculator is an online gadget that allows you to adjust the terms of your ULIP plan before the actual purchase. You can find ULIP calculators on your chosen insurance provider’s website. Based on the type of ULIP plans, inclusions, exclusions, terms, and investment instruments, the ULIP calculator may ask for the following information:

1. Personal details such as name, contact information, date of birth, gender, education, occupation, and annual income. Based on the availability of plans, some ULIP calculators may also ask for your citizenship or NRI status.
2. ULIP policy details, such as the total sum assured and policy tenure.
3. Once you choose the coverage, you have the option to invest more money in the unit-linked market through your insurer. You will need to make the following selections on the ULIP calculator:

• Your Financial goal, i.e., how much money you wish to earn through market-linked investments.
• The duration for which you would like to continue investing to earn profits in the market.
• Your risk appetite, i.e., in what kind of market instruments you would like to invest your money, be it risk-free instruments or market-linked instruments.
• Percentage of investment in each type of investment instrument.

Based on your financial goal, investment choices, and risk appetite, the ULIP calculator will figure out your total premium. You can adjust the parameters of your investment and insurance portfolio based on your current finances.

Why ULIPs are good for senior citizens?

Ulips are a means to increase your net worth and stabilise the possibility of higher returns. Senior citizens often have higher financial burdens. Medical costs, livelihood, and other related expenses can sometimes surpass the basic retirement fund. At such times, it is important to have a second income source.

ULIPs serve a multifold purpose.

Firstly, you can secure the future finances of those you love, be it your spouse, parents, children or other friends and relatives. Any unused profits from your investments are paid to your beneficiaries in the event of your demise.

Secondly, ULIPs let you invest your money in the market to earn profits without extensive knowledge of the financial sector. All you need to do is determine the amount you want to invest, the rate of return, and your risk appetite. Your insurance provider will invest the money and manage your funds.

Thirdly, ULIPs also allow you to earn real-time returns from market investments. Since ULIPs are available in many forms, including debt funds, assets, liquid funds, etc., the withdrawal process is easier. You can withdraw your profits to meet financial needs in real time and continue investing again.

ULIPs are extremely useful plans for senior citizens to build a corpus steadily. However, there are some pitfalls, such as market volatility. It is important to determine your risk appetite carefully to avoid unnecessary losses in the market.

Conclusion

Senior citizens tend to have higher necessary expenses. To meet these expenses effectively, ULIPs can serve a very important purpose. Investing in the unit-linked market allows you to secure your beneficiaries’ future while simultaneously growing your wealth. ULIP calculators are excellent additions to this equation as they simplify the task of choosing the right plan with the right coverage and investment portfolio. Planning your ULIPs carefully can be beneficial to you and your loved ones in the long run.