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Fund Switching in Insurance

Know what is Fund Switching & its various benefits. Further, find all the key factors that you need to consider before doing fund switching. Keep reading!<br>

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Fund Switching in Insurance

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  1. Fund Switching in Insurance

  2. What is Fund Switching? • Fund switching in insurance is a feature of ULIP which enables the policyholders to shift their money from one fund to another within the same plan. Policyholders can choose the fund as per their financial goals and risk tolerance. • A thing to keep in mind is that insurance companies allow limited switches. There are charges applicable for every switch after a certain number.

  3. Key Factors to consider before fund switching • Risk Appetite: The most important thing you should take into account when transferring funds is your willingness to incur risks. You can therefore select debt or equity funds. To determine your level of risk tolerance, consult a financial advisor or other specialist. • Financial Goals: Your long-term financial objectives should determine how you should switch your funds. For instance, equities funds may be more volatile for your short-term objectives but ideal for your long-term objectives. You can start with an equity fund to build your wealth and then think about switching to a debt fund as you get closer to your goal because debt funds are generally less volatile than equities. • Life Stage: People at various periods of life have various priorities. Therefore, if you are young and have fewer obligations, you may decide to take more risks. Your capacity for taking risks, though, can decline as you age. Consequently, you can change funds based on your stage of life.

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