Saving With ULIPs During COVID-19 Pandemic: Everything You Need To Know

The first reports of this virus began to circulate in January 2020. Back then, none of us could have predicted the financial havoc that this small virus would cause. This isn't even the final version. However, many financial analysts feel the worst is yet to come.

According to Vitor Gaspar of the International Monetary Fund, the economic consequences of a worldwide shutdown might be worse than the financial crisis of 2008-09.
In every sense of the word, we're in the midst of a lot of uncertainty. As a result, it's more crucial than ever to actively seek appropriate investment plans that will help you safeguard your future. That is where ULIP comes into the picture.

Saving With ULIPs During COVID-19 Pandemic

Below are few reasons why you must choose ULIPs during COVID-19 Pandemic:

1. Returns That Are Linked To The Market

ULIPs may also be used for wealth accumulation. One's premiums can be invested in equity funds, debt funds, or a combination of the two. All one has to do is choose which funds are available in the product they want to invest in, and they're good to go. Due to the time horizon, multiple market cycles, and the power of compounding that occurs over time, market-linked returns may likely perform better. With the correct investment horizon, however, the same volatility can lead to long-term gains that help you fight inflation, which eats into your earnings as living costs rise. Keeping your ULIP invested during a pandemic may help you compound your gains.

2. Flexibility In Investments

These decisions aren't etched in stone once you've picked which funds you want to invest in your ULIP. You can adjust the funds to your preference or use your insurance company's automatic switching option (if available as per product conditions). You have the flexibility to swap from debt to equity or vice versa as needed. You can either keep an eye on the market and make strategic fund transfers, or you can get guidance from a subject matter specialist who can assist you with your decision-making.

Even in difficult circumstances, such as the current pandemic, ULIP benefits may allow you to maximize your gains.

3. ULIP Tax Advantages

Another advantage of ULIPs is that they have been immune from LTCG tax and qualify for write-offs under section 80C, whereas the maturity or death payout in a ULIP is tax-free by section 10 (10D) of the Income Tax Act of 1961, as indicated in the 289 rules.

4. Product Brochures And Key Feature Documents

Benefit graphics are important for showing ULIPs' quantifiable qualities, but it's also important to understand the other traits and benefits they have to offer.
You may discover more about the benefits of your coverage by reading the policy booklet. Once your policy is authorized, you'll receive a key feature paper that summarises the plan's important features. This, combined with the product material, ensures that you understand the plan you've purchased completely.

Conclusion

It's difficult to manage your money during a pandemic in order to protect your savings and develop your fortune. Many people join the panic buying life insurance train by opting for coverage that expressly covers COVID-19. Financial solutions such as ULIPs, on the other hand, offer the combined benefits of investment and protection, making them one of the best places to deposit your money during these tough times. You can either manually switch your funds or ask your insurance provider to do so for you at regular intervals in accordance with the product terms and conditions.

Also read - What Is Premium Redirection In ULIPs?

Avantages and Limitations Of ULIPs

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.