Due to the rapidly growing demands for a Unit Linked Insurance Plan (ULIP), the investors wish to add value for money with a ULIP investment. Although the ULIPs have massively gained popularity, not many investors are completely aware of the features offered by a ULIP plan. One such feature that needs to be addressed to the investors is the top-up facility of a ULIP. With the help of a top-up facility, the investor can enhance the ULIP investment as well as channel his/her investment in the right direction to achieve his life goals.
Before availing the top-up facility for a ULIP Policy, understand the benefits of this feature to make an informed decision in the future. By the end of this article, you’ll be able to find out what a top-up facility is and how it works towards making your ULIP Policy better. Let’s begin by first finding out everything in detail about the top-up facility:
What is a top-up facility?
A top-up facility is provided by the insurance companies to increase the invested amount of the policyholder in order to make it a part of his/her policy. It can be availed only if the policyholder makes the premium payments on regular intervals. With the help of a top-up facility, the investor can contribute to the growth of his/her savings until the existence of his/her policy. Moreover, the top-up facility must be availed on a base policy.
When an investor purchases a ULIP Policy, he/she has the option to pay the top-up premiums anytime based on his/her suitability. A top-up premium is the amount paid at irregular intervals over and above the basic premium. This premium should not exceed a certain percentage of the total premiums which are paid every year. The insurance companies allow the minimum top-up premium approximately for Rs. 2,000, however, it depends from company to company.
Each top-up premium made during the currency of the contract, except for pension products, shall have insurance cover treating them as single premium. You need to check the limit of the top up premium you can pay before opting in. The next step towards knowing everything about the top-up facility is by making the right use of it. To make the most of these top-up facilities, the policyholder must know how to enhance their ULIP returns with its help. So if you’re wondering how to enhance ULIP returns with the top-up facility, take a look below:
How to enhance ULIP returns with the help of the top-up facility?
1. Consider associated costs
The main aspect of a top-up facility is the payment of the premium. Apart from the top-up premium, the other costs of the top-up facility are fund management charges and mortality charges. These varied costs associated with a top-up facility vary as it depends from one insurer to the other.
2. Opt for online payment
Certain insurance companies allow the online payment of top-up premiums. Online payment of top-up premiums is one of the preferred and the quickest way. Since the online availability is quite new, check with insurance companies whether or not they provide their policyholders with this option of online top-up premiums
3. Accumulate surplus cash
If you have an excessive accumulation of wealth in your funds, see to it that you channelize the money in the right direction. One such way of doing so is by opting for a top-up facility under a ULIP Plan. In case your ULIP policy has been continuously performing well, you can top it with a premium as per the limits defined by the insurer on their respective product.
To sum up, the top-up facility option in a ULIP Policy has been introduced by a majority of insurance companies as an enhanced feature of their policies. Top-ups are a simple and convenient tool, which help you in making adhoc contribution towards your investment in a ULIP Plan. A top-up facility is helpful to take your ULIP investment forward in the long run.