Ulip Is The Best Investment Option For Long Term Savings

ULIPs are the most worthwhile ways to start investing in the equity market. Moreover, apart from this, ULIP plans also offer a combined benefit of investment cum insurance to the individual. With a wide range of fund options to invest in, ULIPs works as a great long term investment instrument to achieve the financial objective of life. 

Whenever an investor invests in a ULIP plan, a few pre-decided charges are deducted. These charges are- policy administration charges, fund management charge, surrender charge, mortality charge, etc. 

Below are some reasons why it is advisable to purchase a ULIP for long term savings.

Reasons Why You Should Purchase ULIPs For Long-Term Investments

Here's a list of reasons why you should purchase an ULIP for long term investments: 

1. Flexibility 

ULIPs are very flexible as they give you the option of switching funds during the policy period. In fact, it is the only financial tool that offers such flexibility. It allows the insured to move their investment amount fully or partially from one fund to another. You can opt for any one of them as per your needs and performance of funds. This includes growth, balanced, equity, and income funds. In fact, you can easily make three to four switches every year without any cost. All you need to do is to choose the policy, change its fund allocation, and go for it till your policy ends so that you enjoy long-term benefits.

2. Better Returns

This is yet another reason why ULIP is the apt option for long-term wealth creation. As compared to other products, ULIPs have great potential to gain good returns as they invest the premium paid by you in several asset classes. It also gives you the option to opt for a different fund every year as per its performance.

3. Tax Benefits

ULIPs also allow tax benefits as per Section 80C of the Income Tax Act, 1961. An ideal tax-saving option depends on several factors such as lock-in period, maturity benefits and amount of return. Thus, as compared to other investment options, ULIP is relatively the best investment option as you buy the policy once but get tax benefits every year till the end of the policy term

4. Lock-in Period Duration 

If you want to develop a habit of disciplined investing, then ULIP is the ideal bet for you as it comes with a lock-in period of five years. Since ULIP is a long-term investment option, investing in a single ULIP would be sufficient. Generally, the lock-in period is calculated on the basis of the date of policy issued and the premium amount has to be paid monthly or annually as a lump sum. Moreover, the policyholder can choose to discontinue the policy after the lock-in period of 5 years and can withdraw money as per the need.

Takeaway

Hence, with so many investment options available in the market, it gets difficult to choose the one befitting your investment needs. Thus, you may choose ULIP as your investment instrument as it maintains a great balance between providing insurance cover and generating great returns.

Also read - How Can Life Insurance Be an Effective Investment Tool?

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.