ULIP, an acronym for Unit-Linked Insurance Plan, has emerged as a robust option for those seeking both protection and growth. The difference between an ordinary life insurance plan and a ULIP is that the ULIP has dual benefits for the investor. ULIPs offer a unique blend of insurance and investment opportunities that can be tailored to your needs.
The ULIP allows you to build wealth while also protecting your family’s finances, in case of an unfortunate event. ULIPs have gained popularity in recent years due to their flexible nature and potential for higher returns. When you pay the insurance premium for a ULIP, a portion of your premium goes towards providing insurance coverage, while the rest is invested in a range of funds. Let’s delve into the world of ULIPs to help you understand their importance and customization features.
Why Choose a ULIP Plan For Your Financial Goals and Planning?
Contents
There are many reasons why the ULIP plan is a good one for you. Read on to find out more.
Market investment
ULIPs allow you to invest in market-linked funds to help you grow your wealth over time. They are designed to serve different types of investors – aggressive, balanced and conservative, by offering a variety of funds to invest money such as equity funds, debt funds, and balanced funds. You can also allocate your money to these funds simultaneously. You can invest in different funds based on your risk profile and financial goals.
Make sure you use a ULIP calculator to calculate the money you need to invest and the funds you get in return. A ULIP calculator is an easy-to-use online tool that helps you calculate the estimated returns on your ULIP investment. The calculator provides a clear picture of the potential maturity amount. It allows you to take charge of your investments and make informed decisions.
Full control of investment
There is a misconception that if you choose a ULIP plan, the insurance company has control of your investments. The truth is you can easily choose the type of investment instruments you want to use for the plan. The insurance company helps you invest in the instruments, but the choice solely depends on you.
It is very easy for you to choose and monitor the type of funds that your money goes into. The whole decision depends on how far you can deal with market risk and how well you can invest for a long time. Depending on your choice, you will get the returns after the ULIP lock-in period.
ULIPs also provide the freedom to switch between various asset classes as per your changing needs. This option is crucial during volatile market conditions.
Additional loyalty benefits
ULIPs also provide a lot of benefits apart from the chosen returns. If you let the ULIP mature for a long time and do not withdraw immediately, your funds will stabilize, and the corpus will increase in size. The more you wait before withdrawing the money from the ULIP plan, the more money you will get as returns.
So, you can get additional bonus and loyalty benefits on the ULIP plans if you invest wisely and wait for your returns. The wealth you want for the later period of your life and your retirement corpus will be very secure through a good ULIP plan. This way, you can create passive income along with active income when you invest in ULIP.
Insurance
ULIPs also provide insurance against mishaps and accidents, thereby providing a safety net in case of an unfortunate event.
The insurance coverage can be pretty high, with nearly ten times the premium you have invested. So, you not only get your return on investment money, you also get the insurance money in case of an adverse event. So, the ULIP is a dual protective cover and a financial boon for your family.
Tax exemptions
In addition to the flexibility and investment opportunities, ULIPs also offer tax benefits under Section 80C and Section 10(10D) of the Income Tax Act. The premiums you pay towards your ULIP are eligible for tax deductions, and the maturity proceeds are tax-free, making them an attractive option for long-term wealth creation.
Conclusion
ULIP investment strategies hold immense potential for long-term wealth creation along with providing a financial cushion in the event of one’s untimely demise. ULIPs provide many benefits like higher returns due to market-linked investments, tax benefits, safety cover, flexibility of switching between funds, and control of your investments.
With the right strategies, ULIP investments can help you secure a brighter financial future. Before you make the choice, make sure you compare ULIP with different types of life insurance and make the right choice to pave the path to financial prosperity. So start early, and embark on a journey of financial security and peace of mind.
