Every individual has certain goals for oneself and one’s family. Life insurance is the safety measure a person should always take up for himself/herself and his/her family. ULIP is one of the best ways to fulfil the aspirations of the individual, along with safety. The full form of ULIP is Unit Linked Insurance Plan. ULIP is a life insurance plan with a package of attractive investment returns. ULIP is a life insurance product which ensures that an investor gets both insurance and investment cover under a single plan. ULIPs are generally opted by people for life insurance and investment purposes. In ULIP, a part of the premium is deducted for insurance and the other part is invested in various selected funds. Here, the policyholder has to pay the premium monthly, quarterly, half-yearly or annually. The term of the policy is for five, ten or fifteen or more years and through this period of time, units are accumulated. An investor can invest in any number of qualified funds which in turn investment in stocks, bonds or mutual funds. ULIPs are subject to market risk as they are associated with the capital market. The benefit of ULIP is wealth creation along with life insurance. As a result, money grows from time to time and the future is also secured from the unexpected turn of events in life. If an investor has enrolled for a ULIP plan, the beneficiary can receive payments following the death of the investor.
WHY CHOOSE ULIP PLAN IN LIFE INSURANCE
ULIP is a reliable investment option. When compared to other instruments available in the market, ULIP is something out of the box which offers a combination of benefits such as: wealth protection, value appreciation, strategic flexibility and tax savings.
Now, why should we choose ULIP over other available life insurance plans? The answer is simple. ULIP provides investment flexibility i.e., one can invest one’s money as per investment risk either in equity, debt or hybrid funds. It also gives the option to switch between investment funds according to the changing needs. In this way, an investor can escape market risks and benefit from market upturns. A policyholder can switch the accumulated amount among any of the six to eight or more funds based on availability. Thus, it assures steady wealth appreciation with safeguards and transparency.
Moreover, ULIPs are beneficial for aggressive and dynamic young people, as the money gets compounded for a long period of time. It provides better returns in the long run. A young individual with high-risk tolerance can obtain maximum from this instrument.
Amongst several investor-friendly plans and insurance options, ULIP ensures tax benefits under prevailing Government norms like section 80C of the Income Tax Act. ULIPs also provide inflation-proof real returns over the long run, unlike PFs.
An individual is also provided with the option of receiving the total value of the fund on maturity in a lump sum or monthly instalments paid over a five-year period time post-maturity. Hence, there is liquidity option available for the investor.
Last but not the least, it is an investment scheme which provides a life cover along with the attainment of life’s objectives. In this way, ULIP as a life insurance plan stands out from the crowd and makes its own mark.
CHOOSING ULIP AND ITS BENEFITS
Tax benefits are attractive advantages to choosing ULIP. As it is a life insurance product, investors can get tax rebates under section 80C and all withdrawals, maturity and death benefit under section 10(10D) of the Income Tax Act, 1961. Even, the growth of the money is not taxable. In this way, money grows steadily and is saved at the same time. This makes ULIPs more demanding than mutual funds.
Here, money grows faster over a longer time than savings accounts or bank fixed deposits. For achieving long-term goals like opening a start-up, children’s marriage or buying a new car, ULIP can be the saviour.
Now, the new IRDAI guidelines have made ULIP more investor-friendly than ever. Costs like premium allocation charges, surrender charges etc., have come down nowadays. So, choosing ULIP can prove to be a wise strategy of investment.
As mentioned earlier, ULIP is a product offered by life insurance companies. It provides a life cover with a commendable investment scenario.
Overall, we can say that ULIPs are ideal policies in the arena of life insurance. It is a boon to the investors having significant long-term financial goals.