Everyone has future financial goals that we wish to accomplish as per the set timelines. It is helpful to have a sound investment and insurance strategy in place to achieve the set objectives on time. A unit linked insurance plan (ULIP) is one of the top-performing investment instruments available in the market.
The policy is primarily an insurance product that offers the benefits of investments. Due to this very reason, ULIPs have been popular among most investors in India. In addition, ULIP insurance is known as a goal-based investment so that you can align your future financial goals to it.
With the correct type of ULIP, you can balance your investments between equity and debt funds to yield good returns. Some of the key benefits of a robust ULIP plan are as follows –
- Covers you and your loved ones against life uncertainties
As we mentioned earlier, everyone has certain dreams that we want to achieve in the future. If you wish to buy a new house, pay for your child’s education, or plan your retirement, you have to start saving at an early stage. Along with this, you have to ensure that your loved ones are financially protected, especially in your absence.
A ULIP plan provides long-term investment opportunities that allow you to save money to accomplish your goals and secure you from life uncertainties as well. Moreover, the sum assured amount of your ULIPs covers the rising needs of your family.
- Helps maximize investment returns
The investment part of ULIPs comes with a wide range of debt and equity fund options. As per your risk appetite, future financial goals, and affordability, you can choose the best combination of these ULIP funds in your portfolio. That way, you can maximize your returns and meet your future goals.
- Flexible
At times, the funds you invest in do not perform well in the market. ULIPs provide a fund switching facility that will help you make changes to your portfolio as and when needed. So, with this facility, you can switch between debt and equity funds depending on the market performance to yield better returns in the future.
Also, you can enhance your investment portfolio with top-ups if you have extra money on you. You can get a dedicated fund manager to keep a track on your investment performance and make necessary changes when needed so that you can earn maximum ULIP benefits.
- Offers quick and hassle-free payouts
ULIPs are one of the best investments that cover you for unforeseen emergencies. In fact, it provides the facility of partial withdrawal so that you can withdraw money from the account in the face of a financial crisis. However, note that you can only make partial withdrawals after the completion of the five-year lock-in period.
- Tax benefits
Much like any insurance product, ULIPs offer tax benefits as well. The premiums paid towards the policy can be claimed for tax deductions under Section 80C of the old income tax regime. Also, the maturity and death benefits received are tax-free under Section 10(10D) of the Income Tax Act, 1961.
The Bottom Line
ULIPs are an ideal investment plan for all types of investors. They help you achieve your future financial goals on the set timelines if you contribute towards the policy consistently. However, before you choose to invest in ULIPs, evaluate your needs and financial situation.
Also, go through other investment options thoroughly. Based on your evaluation, you can then choose a strategy that best suits your needs, is affordable, involves minimal risk, and allows you to accomplish your goals on time.
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