Planning has always been a pre-requisite for any task you take up, and the same goes for choosing an appropriate investment option. You never know when your life can be disrupted, impacting your finances significantly. Emergencies and unexpected events are part and parcel of life, and there’s no running away from it.
While you have to prepare against the unpredictability of life, you might also have certain life goals that appear to be a far-fetched dream. To overcome all this and live a worry-free life, it is imperative to plan your finances and look at alternatives for passive wealth creation.
How about investing in a plan which provides insurance coverage along with fair returns on investment? Sounds interesting, right? Investing in a ULIP Policy is the solution. But what is ULIP? A ULIP policy (Unit Linked Insurance Plan) bears the potential of providing life cover for a partial amount of your premiums paid and investing rest of the amount in either debt, equity or a combination of both. Thus, helping you avail the benefits of economic growth with a source of wealth creation.
Find below the lucrative benefits of investing in the best ULIP Policy:
- Enjoy Life Cover and Savings Benefit Under One Plan
Once you’ve bought a ULIP policy, you can enjoy the benefits of life cover and saving benefits under one plan. You have the liberty to decide the proportion of your premium amount that goes into the two, based on your financial goals.
A ULIP policy also allows you to avail the benefits of market-linked securities like debt, equity, etc., depending on your risk appetite. You can choose an appropriate investment instrument as per the degree of risk that is palatable for you. For instance, if you fall into the category of high risk-tolerance, you can consider opting for equity investment.
- Enjoy Long-Term Benefit
One of the top benefits of investing in a ULIP policy is the long term growth opportunity since they come with a five-year lock-in period. So, you stand a higher chance of availing better returns if you invest for an extended tenure, depending on your investment demands.
When you plan and invest in the best ULIP policy that aligns with your goals, the corpus you accumulate can be used to attain different goals, like, paying for children’s higher education, paying down payment of a home loan, etc.
- Tax Benefits
There are certain tax benefits to avail while you invest in a ULIP policy. These are the tax deductions available under Section 80C of Income Tax Act, 1961:
- The premium you pay for a ULIP policy is exempted from taxes up to a limit of Rs 1.5 lakh per annum.
- As per the changes introduced in the Union Budget 2021, the maturity proceeds of a ULIP policy with a premium over Rs. 2.5 lakhs are not tax exempted anymore. However, the death benefit from the insurance aspect of a ULIP policy remains tax-free.
One of the best ULIP policy benefits is the flexibility it offers to the policyholder throughout the investment tenure to match the evolving needs with time. You can experience flexibility in terms of:
- Choosing your fund option
- Changing your life cover
- Change your premium investment amount
- Choosing a rider
You can easily change the particulars mentioned above just after undergoing a few formalities. A notable point here is that the frequency and applicable charges may vary depending on the insurer.
As an investor, you should be aware of all the particulars while investing your money. You get to experience transparency in the following ways:
- About the Benefits
It helps you understand the usage of your premium and the associated policy charges. Apart from this, it also enables you to understand the possibility of returns based on the sum assured.
- Documents and Brochures with Product Details
Apart from these measurable aspects, the insurance providers also provide you with all the details about the insurance products and the terms and conditions to avoid confusion later.
- To Stay Informed About the Portfolio
Daily NAV (Net Asset Value) reporting, annual account statement, etc. are provided on the insurer’s website to keep you informed about the investment portfolio.
- Partial Withdrawal Facility
When you invest in a ULIP policy, you become eligible for various withdrawal options. There’s a five year lock-in period, before which you cannot make any withdrawals. But, after the tenure of 5 years, you can easily make partial withdrawals, depending on the terms and conditions of the particular policy.
- Switch Between Different Fund Options
As you invest the partial amount in market-linked securities, you can easily switch between the investment options, like debt and equity with your changing requirements. If you find your risk-taking abilities have changed at a particular stage of life and expect a sustainable flow of funds, you can switch to more favourable fund options.
Therefore, finding the best ULIP policy that suits your requirements can give you a range of benefits and inculcate a habit of disciplined savings in you. By investing early and thinking long-term, you can avail the desired benefits of investing while financially securing your future in the best way.