ULIPs have an advantage in that they may be flexible and personalised. ULIPs offer the flexibility of premium payment. You can transfer your funds back and forth between equity and debt funds. When you need money, you can take a portion out of a ULIP. Determining where to invest also depends on your risk tolerance.
ULIPs provide ULIP tax benefits on both the premiums paid and the returns received at the end of the policy, in addition to these advantages.
The ULIP calculator is a simple tool that you can use to predict the return you might get at maturity.
There are five good reasons to buy ULIPs.
- ULIPs Provide Versatility
- Freedom to select your fund option: The majority of ULIPs offer a selection of equities, debt, and balanced fund alternatives. You can invest your money accordingly to your risk tolerance and expected return.
- Ability to modify your life insurance coverage: You can select your Sum Assured at the outset of your policy with ULIPs. Certain ULIPs additionally allow you to raise your Sum Assured throughout the policy to accommodate your changing protection needs.
- Flexibility to alter the amount you invest in your premium: You can pay a top-up sum with ULIPs and your regular premium. To maximise the rewards on your investment, choose this option.
- Ability to choose a rider: Riders are optional extras that you can select to personalise your ULIPs and obtain more security. The Unit Linked Accident and Disability Benefit Rider is among the most popular riders.
- ULIPs Provide Clarity
With the aid of the following characteristics, the charging structure of ULIPs is visible and enables you to make wise decisions:
- Beneficial Example: You can better comprehend your premium consumption and insurance costs with a benefit illustration. Important details about potential gains based on the selected Amount Assured and premium are also highlighted.
- Important Feature Papers and Product Brochures: While benefit examples are very helpful in understanding the quantifiable parts of ULIPs, you must also comprehend all of the other characteristics and advantages that ULIPs offer.
To learn more about the specific benefits of your policy, see the product booklet. You will receive a key feature paper outlining the major aspects of the plan as soon as your policy is issued. This and the product literature guarantee you fully comprehend the plan you bought.
- Free Look Window: Most life insurance policies, including ULIPs, have a free-look period. If you are unhappy with your insurance policy, you normally have 15 days to cancel it. After subtracting the necessary fees specified in the policy, the entire premium will be returned to you.
- NAV – Net Asset Value: It’s crucial to regularly check on how your coverage is holding up. The company publishes daily NAV updates to assist you in doing this. The NAV is the cost at which a fund’s units are bought. You can see how well your investments perform by looking at changes in the NAV value (increases or decreases).
- ULIPs Promote Savings With Goals
You must save money to achieve your major life objectives, like purchasing a home, paying for your children’s higher education, or guaranteeing a happy retirement. One of the most convenient methods to achieve this is through ULIPs or long-term systematic investment options. ULIPs support disciplined investing because they are made to help you achieve important financial objectives. With such a strategy, you can save your long-term objectives to meet immediate requirements.
- ULIPs Provide Tax Advantages
ULIPs are effective tax-saving tools that provide unrivalled ULIP tax benefits throughout the course of your policy:
- Stage 1: Entry advantage – In accordance with Sections 80C and 80D, you obtain tax benefits on your premium payments.
- Stage 2: Financial Gain – Your investment’s returns are not taxable.
- Stage 3: Exclusive switching advantage
- Stage 4: Exit Advantage – You can make debt-to-equity switches tax-free.
Additionally, Section 10 provides that your Maturity Benefit, which is tax-free, is paid to you (10D)
- ULIPs Provide Liquidity
A ULIP permits partial withdrawals of funds after the 5-year lock-in period, which is one of its characteristics. With this service, you can access a portion of your insurance payout when needed. This makes sure that you’re always prepared financially for emergencies. Also, you can withdraw the money as often as you require. However, it is advised to avoid withdrawing from your ULIP unless absolutely necessary to assist you in reaching your long-term financial goals, which may include paying for your child’s education, purchasing a home, and more.
