Fund switching is one of the most significant benefits of investing in ULIPs. Check out this post to understand how fund switching works and how fast the switches are affected in ULIP plans.
Unit Linked Insurance Plans, popularly known as ULIPs, offer the dual benefit of life insurance and investment. A portion of the premium you pay is reserved for purchasing life insurance cover, while the rest is invested in a fund chosen by the policyholder. Insurers offer equity, debt, and balanced fund options to help investors select funds that best meet their requirements.
One of the most significant benefits of ULIPs is the fund switching option. Policyholders can switch between the fund options available within their policy to make the most of their investment. Here’s everything you should know about fund switching in ULIPs-
What is Fund Switching in ULIPs?
ULIP investors are provided multiple fund options. With the fund switching option, they can switch between various funds available within the plan. For instance, one can switch from equity to debt or vice versa or divide their investments between equity and debt funds.
Factors such as market conditions, financial objectives, risk appetite, and age should be taken into consideration to make informed fund switching decisions.
What are the Charges for Using the Fund Switching Option?
Most top insurers in the country offer at least a few free switches to the policyholders. Beyond the free switch limit, one might have to pay Rs. 50 to Rs. 300 per switch depending on the insurer you’ve selected. You can check the policy documents or visit the official website of your insurer to know more about the applicable charges.
There are also a few insurance providers that offer unlimited free switches. If you are still in the process of comparing ULIPs, then ensure that you choose a plan offered by one such insurer.
How Fast is the Fund Switch Affected in ULIPs?
Insurers follow a cut-off time method to execute fund switches. In most cases, if a policyholder requests a fund switch before 4.15 p.m. on a working day, then it will be processed as per the NAV of the current day. The investment will be moved from the previous fund to the new one chosen by the policyholder by the next working day.
If the fund switch request is placed after 4.15 p.m., then it is processed as per the closing NAV of the following working day. Apart from the weekends and bank holidays, your fund switch request should be processed within 24-48 hours.
How to Request a Fund Switch in ULIP?
You can switch between ULIP funds offline or online. In the offline mode, you’ll be required to fill and submit the endorsement form at the nearest office of the insurer. For an online ULIP policy switch, you can log into the online portal of your insurer and use the “Fund Switch” option.
Depending on the time when you make the switch, the requested changes will be made within 24-48 hours. In case of any queries, you can always contact the support team of your insurer.
Making the Most of Your ULIP Investment with Fund Switching
With the fund switch option in ULIPs, you can move your investments between various funds to try and generate higher returns in the longer run. But as it is impossible to precisely predict the market movements, ensure that you use this facility after adequate research and analysis.
You can also consult an investment advisor or insurance provider to help you make informed investment decisions.