It is important to earn money to lead a comfortable and financially independent life. However, saving money is equally necessary, and everyone is not financially disciplined to do so. Saving money requires proper planning and responsibility.
We all need to save money to safeguard ourselves from any unforeseen situations and financial distress. The sluggish growth of the economy due to the Coronavirus (COVID-19) pandemic has made people realize the need to secure their monetary future.
Investing in a financial instrument that can grow your wealth is the need of the hour. Therefore, it is advisable to ascertain your long-term financial objectives and search for a plan that can help you to achieve them. Unit-Linked Insurance Plan (ULIP) is one investment alternative that can insure your life and function as a catalyst through which you can earn lucrative returns in the long run. To know more details of what is ULIP policy, read on.
ULIP is a one-of-its-kind insurance policy that provides life coverage and allows you to invest in equity, debt, or a combination of both types of funds as per your risk appetite. Therefore, it is recommended to research and find the right plan ULIP, and understand more about its different aspects, like the tenure, the sum assured, and maturity and death benefits to get a clear idea. Consult with your financial advisor about which are the top-performing ULIP funds, and then invest wisely.
Many traditional savings plans are available in the market, which offer assured returns on investment. However, ULIP has an edge over these plans, as it has many investor-friendly plus points.
Benefits of ULIP
Here are a few important highlights of ULIP that will help you understand why it scores over conventional savings plans:
- Dual advantage
ULIPs offer the double benefits of life insurance and investment under a single plan. By investing in ULIP, you can ensure your family’s economic well-being and grow your wealth exponentially.
- Various options for investment
Investors have different risk-bearing capabilities. Some people have a low-risk appetite, so they choose to invest in debt funds, as these are a safe option. However, high-risk investors can invest in equity funds. So, you can opt for a ULIP fund as per your risk-taking ability and financial objectives.
- Flexibility of switching funds
One of the best features of ULIP is that you can shift your investment from one fund to another. The performance of ULIP funds is dependent on how the equity market fares. If the equity market is bullish, you can move your money from debt funds to equity funds to maximize the returns on investment. On the other hand, if the market is bearish, you can transfer your investments from equity funds to debt funds to shield the accumulated wealth.
- Ideal long-term investment
ULIP is an appropriate long-term investment avenue, as you can reap the benefits of compounding. So, whether you aspire to buy a home or an expensive car, you can fulfill your goal by investing in ULIP for a long duration of at least 15 years.
One of the best features of ULIP is that it comes with different riders. By paying an extra amount, you can easily add a rider to your ULIP to protect yourself against untoward circumstances. Some riders that you can consider are accidental death rider, waiver of premium, and critical illness rider, among others. This will make your investment plan comprehensive.
- Tax exemptions
ULIP tax benefits are another key offering of this product. As per Section 80C of the Income Tax Act 1961, you can claim a maximum deduction of INR 1.5 lakh per annum on the premium paid towards the policy. Additionally, the maturity and death benefits are tax-free according to Section 10(10D) of the Act.
Due to these promising features, ULIP is an attractive investment alternative for working professionals as well as entrepreneurs in comparison to the regular savings plans. So, secure the financial stability of loved ones and meet your life goals by investing in top-performing ULIP funds for a long tenure.