Women's Personal Finance Blog. I started Girls Just Wanna Have Funds in 2003 as a way for women to begin the conversation about money. Empowering women to break financial ceilings one stiletto at a time
A Unit Linked Insurance Plan (ULIP) allows investors to receive not just insurance but also investment in the same plan. These plans can be convenient, flexible, and easy to understand. ULIPs also provide tax benefits, and of course, potential return on investment. But before selecting a ULIP, there are some things you need to understand.
Level of risk
ULIPs are versatile considering you can decide how much you’d like to risk. But not every risk level is going to be appealing for every prospective investor. While opting for a ULIP that has a higher risk means you may receive a potentially higher reward, this also means your investment may not go as planned.
There are three main types of ULIPs:
Equity-based: Riskiest but the highest reward if it goes right
Debt-based: Much less risky than equity-based ULIPs but have a smaller return on investment
Hybrid/Balanced: Most flexible ULIP as there is the power to choose where to invest; equity and debt funds offered
In fact, even the safest investments have some risk attached to it, according to Finra. That said, for those who don’t like the idea of risk on any level, your best bet is to avoid investing altogether, thus, a ULIP.
Cost of a ULIP
What some don’t realize is that a ULIP can have several different charges including, but not excluded to, allocating charges, a policy administration fee, a fund management fee, and so on. Traditional life insurance plans don’t have these.
For those who would rather pay annual premiums for life insurance without the many charges of a ULIP, term insurance may be more relevant, straight-forward, and easier for you to understand how much you will be paying year-after-year.
Additionally, if you don’t want to be locked in with a ULIP for a period of five years, a term insurance plan will be more convenient because your policy will end after the year is over if you do not pay the next annual premium.
Return on investment
Coming back to what was discussed in the first section, there are different types of ULIPs: equity-based, debt-based, or hybrid-balanced ULIPs. Not only are there different risks but different levels of returns on investment. The riskier the ULIP, the potentially greater return on investment you may be able to receive.
Of course, if you opt for a traditional life insurance plan, you’re not going to get getting the benefit of a return on your investment – because there isn’t any investment taking place. That said, if you wish to gain equity through investment via a ULIP, you’re going to need to accept that there’s a risk attached to any potential gains.
Again, if one isn’t up for risk, then they should be involved in any level of investment and would be better benefitted from a non-linked life insurance plan without investment attached.
Some of the most crucial aspects of ensuring a ULIP is right for you, besides knowing what you’re getting into, is understanding its level of risk, how much it costs, and the return on investment you may be able to receive. Take the time to conduct proper research to educate yourself on a ULIP and what it consists of.
About AEGON Life
AEGON Life Insurance Company Limited launched its pan-India operations in July 2008 with a vision to be the most recommended new age life insurance Company. AEGON is one of the world’s leading financial services organizations (providing life insurance, pension plans, and asset management) and Bennett, Coleman & Company (India’s leading media conglomerate) have come together to launch AEGON Life Insurance. This joint venture adopts a local approach with the power of global expertise to facilitate a direct to customer approach, leveraging digital platforms to bring transparent solutions to customers and to prioritize their needs.
More and more people are becoming interested in investing in Bitcoin. So much so, in fact, that it is now possible to open a digital IRA, which allows you to invest in cryptocurrencies as well as other assets and build your retirement plan. However, it seems that not a day goes by without some “expert” claiming that Bitcoin is either the next best thing in the world, or nothing but a fad that will soon fizzle out. That doesn’t give many people confidence when it comes to making investments. So what do you need to know before investing in Bitcoin?
Is Investing in Bitcoin a Good Idea?
Earlier this year, Bitcoin finally crossed the $10,000 threshold. The speed at which it achieved this is tremendous, since it was worth just $1,000 less than one year ago. However, this doesn’t necessarily talk about the strength of Bitcoin. Rather, it shows that the currency is incredibly volatile. And with anything volatile, there is the potential to make a huge profit, but an equally large potential to lose it all.
The Concept of Scarcity
All economies work on the concept of supply and demand. Simply put, when there is lots of supply, demand starts to drop. But when supply starts to decrease, demand goes up rapidly. And this is where Bitcoin comes in. There is a finite amount of Bitcoin available and everybody knows exactly how much there is and how much is still remaining. Never will there be more than 21 million Bitcoin. That means that it is physically impossible for everybody in the world to ever own at least one Bitcoin at the same time. In other words, there is a scarcity, which means demand goes up.
Now, on the other hand, that doesn’t explain why Bitcoin is suddenly so popular. It was first developed in 2009 and that finite figure of 21 million was set in stone then. What is making Bitcoin so popular now is more down to fear of instability than anything else. Consider, for instance, Venezuela. Inflation in that country may reach 25000%, meaning their currency is all but worthless. Bitcoin, and other cryptocurrencies, aren’t controlled by governments or central banks. They are controlled by regular individuals because they are decentralized. Add to this the scarcity, and it means that a 4000% inflation or deflation is simply impossible.
So should you invest in Bitcoin? From an economic perspective, now is the time to strike. The iron is hot and the value of cryptocurrencies continues to rise. How long that will continue, if at all, is anybody’s guess. But there are always countries with economic instability and one of the key principles of cryptocurrencies is that they should be available to the globe. Hence, it is likely that there will always be an investor somewhere who is willing to buy Bitcoin, keeping the value up.
Should you dedicate 100% of your portfolio to cryptos? Absolutely not! But then you shouldn’t dedicate 100% of your portfolio to any one thing.
The transition between youth and adulthood is pretty fuzzy for most of us. But then we have experiences that remind us that our days of being a kid are long gone. Maybe it’s the first time you have to change a diaper, or when you decide to call it a day at 9:30 PM on a Friday. Everyone gets older, and nowhere does this feel more obvious than when approaching your personal finance life.
Money makes everything more complicated, and complications are a big part of adulthood for most. Here are five financial signs that you’ve entered the world of the grown-ups.
You Have or Are Thinking About Getting, Life Insurance. Life insurance is for responsible people who take care of other people in some way or another. Some single, unattached adults may have reason to forego life insurance, but it’s a necessity for most. This financial product is a great source of peace of mind for people who buy it, but you can be sure that if you’ve ever Googled “term life insurance rates”, you’re absolutely an adult type person.
You Save For Important Stuff. Saving is not limited to adults, but you can be sure that if someone is saving for a home, additional education, a minivan, or other major purchases – this person is almost certainly not a child. Kids who save this way have a great start in life, but may as well be considered honorary adults anyway.
You Have “A Portfolio”. Simple investment terms like “portfolio” are often mysterious to people who aren’t very old. It takes experience and sophistication to create a strong portfolio. Even if you have a portfolio that’s nothing special, you’re still ahead of most adults. Investing doesn’t mean you’re a fuddy duddy, but it almost always means you have entered the land of the somewhat-aged.
You Budget. Budgeting is one of the best aspects of getting older. Sure it’s not sexy, but budgeting is almost always associated with financial freedom. People budget to get out of debt, make sure they spend beneath their means, to open up extra cash for saving, and other reasons as well. Some kids budget, but you only get truly sophisticated in this regard when you are past your last growth spurt.
You Aren’t Always Broke. This one is controversial because some grown up folks are broke through no mistake of their own. However, people who aren’t broke and don’t become broke are usually either rich people/kids, or they are mature people who have learned not to spend more money than they have. It’s nice to leave the college days when you don’t have any money to do or buy much of anything. This is definitely one of the perks of being a financially savvy grown up.
Not every aspect of getting older is pleasant; in fact, most aren’t. On the other hand, getting your personal finances together is amazing, and has tons of secondary benefits. If you relate to any or all of the above, you’re probably over the age of 18 (or even 30), but you should be proud that you’ve figured this much out!