How Can ULIPs Assist You in Increasing Your Earnings

ULIP stands for Unit Linked Insurance Plan and is a policy that gives you the privilege of enjoying both investment and insurance under a single scheme. It is the dual nature that makes it a popular choice among young investors who want the securities of a life insurance policy and also the returns from investments.
ULIP makes an absolute investment plan for the long run. It is like getting interest rates compounded on the money invested, making a way to compensate for losses incurred. ULIPs give you the option to invest in various markets through their diverse fund policies to choose from according to your risk-taking capacity. Facilitating the habit of regular investment in a hassle-free and flexible way is one of its key benefits. There are more benefits to discuss, so keep reading.

Main Features Of ULIPs

The premium you pay contains both the premium for an insurance cover as well as the capital portion for your regular investments. Some of the key features are as follows:

• If you are someone who does not want to face the uncertainty of market volatility through short term investments, ULIP is the perfect investment solution for you. It gives you the privilege to stay in the market for a much longer time and create wealth while dodging the losses incurred by deductions and market fluctuations.
• ULIPs offer you the advantage of choosing among its wide range of equity, debt and balanced funds and investing as per your risk demands while enjoying the facility to switch plans whenever you feel like it.
• It is always hard to trust any policy with the money you have earned from your hard work. So, ULIPs give you a transparent statement of the entire charge structure, fund values and tenure returns even before you invest in any of their offered funds, along with the benefits of providing annual reports and quarterly portfolio strategies while investing.
• Unlike traditional premium policies, ULIPs allow partial liquidity of your funds after at least 2 years of investment, to facilitate a better flow of liquidity without having to sell out held assets.
• The best part of investing through ULIPs is the tax exemption. Under section 80C of the income tax Act, 1961, any premium paid for a ULIP is not taxable.

Tips To Maximise Earnings Through ULIPs

Simply investing in a ULIP isn’t enough to increase your earnings. The key to growing wealth is to utilise the benefits to the max. Here are some important tips to consider for a good investment experience:

• The most important feature of the ULIP to be used at its max capacity is the switching of funds. Never be shy of regularly switching funds as it helps you build a diverse portfolio. Investing in different types of assets helps you lower your market risk factors and also cover for the losses in one with the other. In India, you get an unlimited number of switches throughout the entire duration of your plan to add to the capital gains.
• ULIPs come with the best investment plans for long-term wealth building, so it is recommended to not withdraw partial capital portions for the maximum compounding of returns. Different companies come up with a capital lock-in feature of varied time lengths (e.g., 2, 3 or 5 years) to help their customers in considering a ULIP as a long period compounding process for the maximum capital gains.
• Random fund switching is always a bad idea. Doing your homework on the market evaluations and price predictions with the help of global price indicators and switching funds accordingly is the recommended way to grow wealth through a ULIP.
• Being an insurance policy, getting a loan with an existing ULIP plan becomes so much easier as it requires less paperwork and lowers interest rates levied. This feature should be used at its max to ensure a flow in your regular investments while paying for large utility bills or instalments, without having to liquify your equity shares.

Endnotes

Maximising gains through ULIPs is no rocket science. With proper research and staying updated with market conditions, while switching funds and opting for loans, you can easily grow your earnings over the long term. By keeping your goals aligned and making the best possible decision while investing in different asset classes, you can also master the art of money-making through ULIPs, alongside providing insurance coverage to your loved ones.

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