Know How to Use the Top-Up Facility in ULIP

 

The world entered 2020 full of hope. A new year with a new promise. And then a tragedy struck like never before. A new virus was discovered which went on to infect almost 180 million people across the world, and still counting. The virus, which got named as COVID-19 virus, also killed almost four million people with thousands of deaths still getting reported every day. But that is life. It is unpredictable and full of uncertainties. And the COVID-19 virus reminded us about this unpredictability once again in 2021 when the second wave of the virus hit India with an even greater force. By the first week of May, India was witnessing four lakh fresh infections every day, four times the peak of last year.

While COVID-19 may be a once-in-a-century event, it is just one of the examples of how life can be derailed by something unexpected. Millions of families lost their loved ones, including breadwinners of the families thereby making the impact both emotional and financial.

However, one should not forget that the tragedy of losing a loved one can happen for so many other reasons. Just for an example, around 1.5 lakh people are killed, and more than 4.5 lakh get permanently disabled in around 4.5 lakh accidents in the country every year.

Cases of serious life-threatening ailments like cancer are also rising in India.

While dealing with the emotional trauma of losing a loved one, not having to worry about finances can be a significant relief for the grieving family. Accordingly, it is crucial to work on a sound financial plan right when things are going well for you and your family.

ULIPs to the rescue

What you need exactly is to have a back-up plan to ensure that your family is financially protected in your absence, and simultaneously, you also accumulate enough wealth to give them a bright future if you are always on their side to take care of them. A life insurance plan is something that serves the first part of that plan, while investing wisely can take care of the second.

However, there is a third way which can help you achieve both goals simultaneously. Yes, we are talking about a Unit Linked Insurance Plan, or simply called ULIP. A ULIP is an efficient and long-term financial planning instrument that combines both investment and insurance needs of the investor.

So along with a life insurance coverage, you can invest in a ULIP to achieve various life goals like securing your retirement years, your children’s higher education and marriage, or to meet any other long-term financial goals you might have.

Top-up Facility in ULIPs

Although ULIP plans have massively gained popularity, not many policyholders are aware about some of the features offered by a ULIP plan. One such benefit is the top-up facility of a ULIP.

A top-up facility is provided by life insurance companies to allow policyholders to increase the invested amount in his/her ULIP policy. Note that the top-up facility can be availed only if the policyholder makes the premium payments on regular intervals. It must be availed on the base policy.

How to Top-up Your Policy

When a policyholder purchases a ULIP Policy, he/she may have the option to pay top-up premiums anytime based on his/her choice, as per the product terms & conditions. It is the amount paid at irregular intervals over and above the basic ULIP premium. However, this premium amount should not exceed the total premiums under the policy. Life insurance companies allow for a minimum top-up premium of approximately INR 2,000, however, it varies from insurer to insurer and product to product.

If you have an excessive accumulation of funds, see to it that you channelize your money in the right investment option. In case your ULIP policy has been continuously performing well, you can top it up with a top-up premium as per the limits defined by the insurer on their respective product. Top Ups will lead to increase in cover amount as selected depending on the product terms and conditions.

Insurers like Bajaj Allianz Life allow online payment of top-up premiums, which is a preferred and the quickest way. It is also safe in today’s time with social distancing becoming the norm.

If you decide to go for a ULIP, you should consider a reliable plan like the Bajaj Allianz Life Goal Assure - A Unit-linked Non-Participating Life Insurance Plan. It is one of the preferred options, as not only it gives you all the benefits of a ULIP, it also returns the life cover charges# on maturity. Moreover, to make most of your investment in the ULIP, you can choose from four investment portfolio strategies and receive your maturity benefit in installments$.

Because of the multi-dimensional nature of ULIP benefits, you may consider adding them to your investment portfolio to strike a balance between your insurance and investment needs. With the option of choosing from different funds and adding a top-up when needed, ULIPs can be seen as one of the preferred investment-cum-insurance options available for you to create wealth while also providing financial protection to your loved ones.

# Return of life cover charges = return of mortality charges (ROMC) which is payable on maturity, provided all due premiums have been paid.
$Settlement Option is subject to policy terms and conditions

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References-
[1] https://www.worldometers.info/coronavirus/
[2] https://www.thehindubusinessline.com/news/covid-19-india-records-403738-new-cases/article34519244.ece
[3] https://economictimes.indiatimes.com/news/india/centre-working-on-packages-for-those-who-lost-sole-breadwinner-orphaned-children/articleshow/82985618.cms
[4] https://timesofindia.indiatimes.com/india/road-accident-scenario-more-dangerous-than-covid-in-india-gadkari/articleshow/80899134.cms
[5] https://www.thehindu.com/sci-tech/health/report-predicts-12-rise-in-indias-cancer-burden/article32386880.ece

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