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Long Term ULIP Management

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                <p>ULIPs help you to manage your risk return profile.
With the double advantage of security and investment, ULIPs lately have
become the most popular insurance product from the available range of
life insurance policies. With a higher rate of return, <a rel="nofollow"
onclick="javascript:_gaq.push(['_trackPageview',
'/outgoing/article_exit_link/2945338']);"
href="http://www.inglife.co.in/productcenter/productcenter-retirement-
newfuture.shtml" title="Long Term ULIP
Management"><strong>ULIP</strong></a> gives tough competition to
traditional insurance products like endowment plans and money back plans.
The basic reason for opting for policies other than term insurance is
ensuring highest maturity value for invested sum besides mortality
benefits.</p>
<p>When talking about maturity value, what is most important is the
Internal Rate of Return (IRR) on investment. It is the annualized
compounded rate of return where the net present value of the cost of
investment will equal the net present value of the benefits from
investment. The policy with highest IRR will be most desirable. But to
avoid the feature being exploited by insurance agents, the IRDA has fixed
6% and 10% as the assumed rate of return for projecting future
benefits.</p>
<p>Â </p>
<p>According to the latest ULIP rankings by Outlook Money Birla Sun
Life's Classic Life Premier, ING Vysya Life's High Life and Aviva's
Freedom Life Plan are among the Top 10 Type 1 ULIPs. But investing in a
good ULIP insurance policy is only the first step to smart <a
rel="nofollow" onclick="javascript:_gaq.push(['_trackPageview',
'/outgoing/article_exit_link/2945338']);" href="http://www.inglife.co.in"
title="Long Term ULIP Management"><strong>financial investment
planning</strong></a>. After investing, you need to efficiently manage
your ULIP for optimum returns. Ignoring or forgetting about a ULIP after
investment can result in losses even though you might have invested in
the best ULIP plan available. Thus the trick is to select a good ULIP and
make it perform.</p>
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<p>Â </p>
<p>Although there are fund managers to regularly monitor and deliver
above benchmark returns on your ULIP investments, still you can
considerably improve its performance by taking advantage of the Switching
Mechanism.The switching facility offered by insurance companies enables
the insured to take advantage of the market movements in order to make
profits. Depending upon market sentiments, the investor can switch from
one fund to another without incurring tax liabilities. Generally the life
insurance India companies offer different types of fund options according
to your risk appetite. A conservative fund may have 100% investments in
debt instruments to preserve value; balanced debt fund might have 60: 40
ratio of debt: equity; growth fund could have the debt/ equity ratio at
40:60 to enhance the value of your investments; whereas the prime equity
fund will generally allot anything from 90% to 100% of investments in
equity and related instruments for people with high risk preference.</p>
<p>Â </p>
<p>The general rule for Debt-Equity Portfolio Management in ULIPs is that
you should go conservative by increasing your investments in debt when
the markets are at their highest, very unstable and likely to start
falling any time. Vice versa when the markets are very low and depressed.
You will also be able to accumulate some good stocks in your portfolio at
cheaper value due to low market sentiments by increasing your equity
exposure at this time. When confused about what to do, bend towards debt
to be on the safe side.</p>
<p>Â </p>
<p>On a closing note, ULIPs are great financial planning and retirement
planning product, they just need some timely management. Buy them for
long term and not just for tax saving purposes. Monitor the market
movements and take advantage of the switching facility to optimize your
returns. If you can't do all this, it is better to opt for PPF and Mutual
Funds to be on the safe side.</p>
<p>Â </p>
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posted:11/17/2011
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