ULIPs Offer Five Benefits That Make Them A Good Investment Choice

The Benefits And Reasons To Invest In A ULIP
Take Away

Everyone should be aware of the importance of financial planning. If you have a sound financial plan in place, you can aid your family members financially and establish a secure financial future. There are a variety of financial solutions on the market that can help you achieve your aim. Choosing the right ones to help you achieve your financial goals, on the other hand, maybe a difficult undertaking. Knowing your objectives and ultimate financial goal, on the other hand, makes choosing an instrument that will benefit you much easier. One such financial vehicle that provides both investment and insurance choices is the ULIP. ULIPs have several benefits over typical savings plans. One of the most tempting aspects of ULIP investing is that you may pick the sort of funds you want to invest in, which is something that most traditional savings plans do not allow. Because ULIP returns are inflation-adjusted, they are a secure investment alternative.

The Benefits And Reasons To Invest In A ULIP

The following are some of the causes and benefits of investing in a ULIP:

A Single Package With Two Advantages

The ULIP is the first financial instrument in India that combines investing and life insurance coverage into one package. As a consequence, you won't need to buy separate insurance and investment plans to safeguard your financial future. This helps you to save a significant amount of money on your premiums while also allowing you to better manage your finances.

Tax-Free Allowances

ULIP investments are tax-deductible under Section 80 C of the Internal Revenue Code. An investor can collect up to INR.1,50,000 per year on his ULIP assets. Similarly, the returns you get at the maturity of your ULIP are tax-free under Section 10D of the Income Tax Act. Furthermore, the cash received by the nominee upon the policyholder's death is tax-free under Section 10 (10D) of the Income Tax Act.

Investing Options with a Wide Range of Possibilities

ULIPs offer a lot of flexibility in terms of investing options. This flexibility reveals itself in the following ways:

Switching Funds

You can alter your investment between other funds, such as equities, debt, and balanced funds, depending on your risk tolerance. If you wish to take a high-risk strategy to your investing, you might increase your stock fund investment allocation. However, if you want to lower your risks, you may convert your assets into debt or balanced funds at any moment.

Optional Add-Ons

You can add to your current funds via top-up options.

Redirection Premium

Premium redirection is a feature that allows you to route future premiums to different funds.

Payment Assurance

When you purchase a ULIP, you are guaranteeing a set sum to the nominee in the case of the policyholder's untimely death within the policy term. The guaranteed payout is a fixed, tax-free sum.

For Lock-In Periods, There Is A Withdrawal Facility

When you make any investments, you are generally not allowed to make partial withdrawals during the lock-in period. During the lock-in period, however, you will be allowed to make withdrawals from your ULIP. However, certain fees and deductions are taken from the total amount when you make such withdrawals during the lock-in period.

Higher Profits Potential

When compared to other investment alternatives, ULIP profits have a lot of potential for maximizing financial advantages. Very high outcomes are conceivable due to the flexibility given by both equity and loan capital. Similarly, if you stay invested in ULIPs, you may be eligible for a variety of advantages and incentives. Insurance firms provide bonuses in the form of wealth boosters or loyalty bonuses.

Take Away

Long-term benefits are provided via ULIPs. A 5- to 7-year lock-in term is normal for ULIPs. This gives money invested in equities or debt funds adequate time to rise dramatically. As a consequence, you should begin using ULIPs right now. A balanced fund is a wonderful place to start for folks who are just starting in their professions. Employees with ULIPs have the option of switching to riskier equity funds as their careers progress.

Do read - 3 Ways to Maximize ULIP Returns

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.