Benefits of Purchasing a ULIP

Unit-Linked Insurance Policies (ULIPs) are a popular form of investment as well as insurance. This dual nature of these policies is the biggest contributing factor to their popularity. They are versatile and flexible. Not only do they allow you to grow your wealth but also help you contribute towards a financially stable future for your family in your absence. 

Disciplined investments from an early stage help you in the future. ULIPs equip you with such sound habits. Here are some of the most important benefits of a ULIP.

You May Also Like to Read:- How To Choose A Right ULIP?

Benefits of Purchasing a ULIP

Following are some of the key benefits of purchasing a ULIP - 

1. Flexible Investment Options

ULIPs are a great way to test the waters when it comes to investing. You can switch among equity, debt or balanced funds anytime. There are no taxes implied on this switch. However, some insurance companies cap the number of fund switches in a financial year, while some allow unlimited fund switches throughout the policy tenure.

2. Life Stage Benefit

ULIPs are very considerate when it comes to important stages in your life like marriage or children, wherein you may need an increase in cover. You can add to your existing premium with the top-up facility. This also helps you get bigger returns from your investments.

3. Great Returns

ULIPs are famed for getting great returns on policyholders’ investments as your money is invested in market-linked securities. Regular investments lead to your money getting compounded, thereby guaranteeing higher returns. You can switch between funds according to the returns you are targeting and your risk appetite.

4. Customisation Benefits

Like for all insurance plans, riders are available with ULIPs too. Riders can be added to your basic investment plan to enhance it and make it more comprehensive. They are available for a variety of purposes such as critical illnesses, accidental death and disabilities. You can choose them according to your needs.

5. Partial Withdrawal Benefit

Unlike most investment plans, ULIPs provide the facility of partial withdrawal to their policyholders. This is extremely helpful, especially after the five-year lock-in period. It comes in handy when you face a money crunch. You can withdraw from the money you had invested without having to liquidate your assets.

6. Tax Benefits

Tax benefits under Section 80C of the Income Tax Act are applied to the premium amount paid for the insurance component of ULIPs. Moreover, there is no taxation on the maturity amount or the amount that grows from your investments. If you decide to switch investment funds, there are no taxes imposed on that.

Also Read:- How Does A ULIP Work?

What is the Right Time to Purchase a ULIP?

Endnotes

As evident from the various benefits listed above, a ULIP is a great plan to purchase. It contributes to a financially secure future as soon as your wealth appreciation. Always compare different ULIPs to get the best plan. You can compare the plans easily and conveniently at InsuranceDekho and secure the future for yourself and your loved ones. 

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.