Taking advantage of unit-linked investment products may be a smart idea for people who want to grow their wealth but also want to provide for their families responsibly.
These also are commonly referred to as unit-linked insurance plans because you’re generally investing in an insurance plan that provides for your beneficiaries, but the premiums are not just paying off the insurance plan. In a unit-linked investment product, the money you add regularly is also considered an investment that’s also to invest in a range of funds.
Structured Like a Mutual Fund
These unit-linked insurance plans are structured like mutual funds. You, as the policyholder, open the policy with a lump-sum payment and follow the initial payment with monthly, semi-annual or annual payments that are called premium payments. But only a portion of these payments are payments on the insurance policy.
The rest of the payment is pooled with the payments of other investors in the insurance plan and treated as an investment. It has the same risks as an investment, and the group’s assets are managed with a stated goal that the investors are all aware of. The investors have the freedom of buying shares in a single strategy or diversifying their investments across several market-linked plans.
The benefit of choosing unit-linked insurance plans is that they offer flexibility to investors while providing a safe and secure insurance policy at the same time. Investors who follow the market closely may maximise their profits by moving funds between diversified funds, bond funds or stock funds as their needs and knowledge of the market dictate.
You also can generally choose the ratio of the amount of money applied to your insurance policy and the amount credited to the investment side of the equation. Depending on the relevant terms and conditions, you may also be able to vary the amount of your premium payments depending on your financial circumstances. You may also be able to stop the premium payments temporarily.
The funds you’ll be investing in also have varying amounts of risk. And you have the flexibility to pick and choose the funds that have acceptable levels of risk. When you’re secure with the gains you‘ve made, you may want to take on a bit of extra risk. If you have some unexpected expenses, you may want to scale back on your level of risk. It’s entirely up to you.
Having an investment linked to an insurance plan means that it’s a long-term investment. And you should look at it like that. Many people who invest in unit-linked investment products are conservative investors who appreciate the long-term aspects and are investing primarily for the ultimate benefit of their families.
They also tend to be mature investors who already own their own homes and are secure in their careers. They want to build wealth to take care of their families, but they don’t want to risk what they already have.
Contact the people at Investor’s Trust to find out more details about unit-linked investment products and find out if they’re the right investment for you.