Why types of funds do ULIP offer?
In a ULIP, the insurer offers a huge variety of fund options to choose from. Different plans offer different risk profiles and the potential of return also varies from fund to fund. Some of the basic types of funds available are:
- Equity funds- these funds are invested into company stocks with the intention of capital appreciation.
- Debt funds- these funds are invested in debt instruments like bonds wherein the both the returns and risk is lower as compared to equity. Hence this type of ULIP is best for those who don't want to take any major risks.
- Income, fixed interest and bond funds- the funds are invested into corporate bonds, government securities and other fixed income instruments.
- Cash funds- also known as money market funds, is invested in bank deposits, cash and money market instruments.
- Balanced funds (medium risk) - offers a combination of equity investment with fixed interest instruments.
Read the policy documents carefully and choose a plan that best suits your needs.
