Your Financial Horizons: Are ULIPs Risky Investments?

To provide a short answer to the question posed in the title, ulips can be risky investments if you want them to be (more on that soon). However, if you’re the type of person who prefers to take things with a little bit less variance, the policy can be adjusted accordingly. To shed some light on the issue, we’re going to reveal 4 most common types of investments, arranged in the appropriate categories of risk:

  1. High-risk, high-reward

Do you like to live your life on the edge, enjoying every bit of adrenaline rush you can experience? If this is the case, high-risk, high-reward type of ulips is bound to be a good fit for you and your needs. With this insurance, the investment goes toward stocks and equities that are of high risk. On the flipside, should things go well, these yield the highest rewards in general. All in all, this option is only suitable if you like to gamble a bit, and it’s certainly not for the faint of heart.

  1. Medium risk, low-medium reward

Compared to the investment plan listed above, this option is slightly less risky; however, some of the risk is still there. In concrete terms, the investment goes toward government securities, corporate bonds, fixed-income securities, etc. As can be expected, the reward you can expect is correlated to the amount of risk involved. So, if you don’t mind a little bit of a gamble and if you’re prepared to accept a reward of lesser value in return, this option is worth thinking about.

  1. Low risk, low reward

If you don’t have an appetite for risk, you don’t have to partake in risky activities. If this applies to you, consider low risk, low reward investments. Typically, these are cash and bank deposits, market funds, etc. If you choose to go in this direction, it’s worth pointing out that the principal amount is protected. All the while, the very same amount gradually keeps gaining appreciation. It goes without saying that if the risk is low, the reward cannot be any higher, as these things are always proportional to one another.

  1. Balanced

This option can also be described as medium risk, medium reward, and is sort of the middle ground variant you can try if none of the other alternatives seem appealing to you. Most of the people seem to choose this option because it’s stable and relatively predictable, while still giving a reward of reasonable value. This can be achieved by distributing the investment between multiple stocks and equities, thus dividing the risk. Also, some investments have a fixed interest, so you can count on getting at least something out of it.

Conclusion

As you can see, ulips can be risky investments if you want them to be. If you don’t want to have anything to do with variance and risk, there are low-risk options available, but obviously, the reward will be on the lower side as well. Since every person’s needs and circumstances are different, only you can be the judge which one of these options will be the right fit for you.

About AEGON Life

A joint venture between AEGON – world’s leading financial services and Bennett, Coleman & Company – India’s leading media house, AEGON Life Insurance launched its pan-India operations in July 2008. Armed with a vision to be the most recommended new age life insurance Company, AEGON Life adopts the power of global expertise by leveraging digital platforms to bring transparent solutions, and to prioritize customer needs. Our financial planning and investment solutions include term life insurance plans, pension plans, unit-linked insurance plans (ULIPs), health insurance plans, child education plans, and more.

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