Top Reasons To Purchase a ULIP Right Now

In today's internet-driven world, you can buy ULIPs from the comfort of your own home. It simplifies and speeds up the process. In comparison to their former iteration, ULIPs are undeniably improving. Unit-Lined Insurance Plans provide a triple benefit: life insurance, high returns, and tax savings, all while limiting risk. The possibility of losing money If you acquire the ULIP early, it will be beneficial for you in the long run. So, now is the time to invest in ULIPs to safeguard your financial future and that of your family. Unit-Linked Insurance Plans (ULIPs) are an excellent instrument for both insurance and investing purposes. Because of the modified requirements of the Insurance Regulatory and Development Authority of India, ULIPs have received a complete makeover with lower rates (IRDAI). The next generation of ULIPs deserves a new appearance. Let's have a look at the main reasons why ULIPs are such a wonderful investment.

Top 5 Reasons To Purchase A ULIP Right Now

The following are the top five reasons to purchase a ULIP today:

• Flexibility

ULIP modifications and customizations are popular, and they are often pursued through the following channels:
The total assured amount is determined at the start of the plan by the assured; however, certain ULIPs let you raise it over time. After a set period of time, most plans enable you to change your premium amount. Furthermore, many plans include a top-up feature that allows policyholders to boost their investment returns by investing more via their policies. Most ULIPs allow you to select your fund selection at the time of purchase and at preset periods after that. To fit your preferences, you may select from cautious, aggressive, or a combination of the two funds.

• Illustration of Advantages

The insurance company is supposed to tell you how your premium is spent, what portions are removed for fees, and how the policy will evolve in proportion to the sum assured you choose. A minimum of two scenarios, with a return rate of 6% and a return rate of 10%, are employed. Service providers will also supply you with booklets and a key features sheet if you need more information about the plan.

• Savings System with Rules

In contrast to traditional savings, which are sometimes diverted from their intended purpose in the case of an emergency, ULIPs are a long-term rational investment decision, a prudent strategy to save for specified goals.

• Benefits from Taxes

You can deduct your life and health insurance plans under Section 80C of the Income Tax Act, as well as life insurance policies with critical illness riders under Section 80D. In addition, section 10(10D) exempts the proceeds at maturity or withdrawals from life insurance plans from taxes. You may combine wealth creation and risk control by investing in ULIPs, and most providers will often offer information on the performance of your numerous funds, boosting the value of your investment. Everyone should acquire a ULIP because of these convincing reasons.

• Benefits that are Guaranteed

ULIPs offer guaranteed payments that protect your money from market fluctuations. It implies that the funds you deposit will be safe and secure, and you will never lose them. In this situation, the guaranteed benefit is 101 percent of the entire premiums paid. Many consumers may ask why they should invest in an equity-oriented plan when all they want is stability, which they may get from conservative instruments like PF and bank FDs. The reason is simple: debt, unlike stocks, does not deliver substantial returns over time, as indicated by the prior fact.

• Structure with Transparency

All commissions and fees are mentioned in the policy document since ULIPs are transparent. Furthermore, during the policy duration, ULIP costs and commissions are capped and dispersed evenly. It indicates that a higher amount of your premium will be invested in the market to make money. It outperforms rival investment plans in which fees and commissions account for a large portion of the first-year premium.

• Benefits of a Loan

Only once the policy has reached a surrender value, that is, after it has been in existence for at least one year and all premiums have been paid on time, may a loan be secured against it. 

Take Away

New-age ULIPs are an excellent method to save for the future, including retirement and children's education. Depending on the goals and time horizon, ULIPs can be paired with other investment vehicles such as MFs or PMSs. The efficacy is obvious in terms of performance, cost, and taxation.

Also Read: What to know about ULIPs before investing in them?

How has ULIP changed over the years, in the context of India?