By Amit Sethi
Retirees have a few regular income options available in India that include National Pension Scheme (NPS), ULPP, Annuity plans, etc. ULPPs are often seen as an alternative to the NPS. Similar to Unit Linked Insurance Plans (ULIPs), ULPPs also invest the money in equity and debt instruments according to the investor’s choice. As it is a market-linked product, there is a high risk associated with it and at the same time, there is a chance of earning a high return. ULPPs are subject to a lock-in period of 5 years, therefore you can’t withdraw your investment within the first 5 years.
Return on ULPPs depends on the market performance of the underlying assets. Some ULPPs also offer insurance benefits along with the return on investment. Such product usually offers a lower return compared to ULPPs that are purely for investment purposes as a portion of the premium goes into the insurance portion in the former product. Here are some of the key features of the ULPPs that you must know if you plan to invest in them.
Key Features Of ULPPs
ULPP investments are managed by fund managers, similar to mutual funds. ULPP investment can be tracked through their prevailing NAVs (Net Asset Values). Investors get the option of switching their fund allocation ratio in a ULPP from one asset class to another from time to time. Investment in ULPP is subject to charges such as fund management charges, mortality fees, administration fees, etc. So, your investment value is adjusted to such charges before they are invested in the underlying assets. The age limit for investment in ULPPs varies depending on the product variants and the company’s terms and conditions. ULPP allows the flexibility of investing through SIPs or premiums for a limited number of years.
Is Investment Only In ULPPs Enough For Your Retirement?
How much corpus would be sufficient for your retirement depends on your lifestyle expenses and retirement goals. It is not advised to depend on a single instrument for your retirement goals. Diversifying your investments is essential to reduce the risk and optimise the return on investment in the long term. On maturity, investors can get 60 per cent of the corpus in ULPP as a lump sum and invest the remaining in the annuity schemes. ULPP is an attractive investment product for retirement planning and instead of relying completely on them, you may choose a mix of investment products in sync with your return expectations and risk appetite.
