Unit Linked Insurance Plans have become popular due to their varied, flexible benefits. It is a comprehensive life insurance plan that offers a life cover and market-linked returns. People appreciate the advantages of ULIP considering the investment made on financial securities based on the risk profile while also ensuring a death benefit to secure their family. So, you must be aware of the financial flexibility benefits of ULIP insurance to get the returns. And here is a detail to help you better.

What is a ULIP Plan?

ULIP plan is a comprehensive life insurance policy that provides dual benefits, life cover and market-linked returns on maturity. So, your insurance provider will utilise the premium you pay towards the ULIP insurance to ensure the sum assured that acts as the life cover and for investing in the financial market. Moreover, it has a five year lock-in period, after which partial withdrawal will be permitted. So, with this explanation, let us get ahead understanding the ULIP benefits.

Financial Flexibility Benefits of the ULIP Plan

While ULIP insurance plans offer a life cover and market-linked returns; its flexibility is the key highlight.

• Invest in financial markets based on your risk profile - Investing in securities involves many risks. Therefore, people hesitate to invest their hard-earned money. However, in ULIP plans, you can invest in securities based on your risk appetite.
  
  

  For example, insurers offer equity, balanced, and debt funds for high, medium, and low-risk investors. Therefore, if you belong to a huge family having increasing family responsibilities, you can always invest in a debt fund. The ULIP insurance will provide a life cover to secure your family in your absence and the market-linked returns on maturity.
  
  

• Switch between the fund options - The ULIP insurance plan allows you to switch between the fund options when the market conditions are not favourable. It will help prevent your investment from losing its fund value to a great extent.
  
  

  For example, our Tata AIA ULIP plan provides 11 different fund options to help you invest based on your risk profile. So, you can choose between any of these fund options and switch to a different fund when the market conditions are not favourable. Your fund managers can help you decide the option based on your requirement and affordability and make the necessary changes timely.
  
  

• Flexible premium payment options - One of the most important advantages of the ULIP plan is its flexible premium payment options. You can pay the premium for the ULIP plan regularly throughout the policy tenure or for a limited term based on your convenience.
  
  

  And if you plan to invest regularly, you can choose between paying the premium monthly, semi-annually, quarterly or annually. Therefore, consider your steady flow income and personal and family financial commitments and choose the ideal method to invest conveniently.
  
  

• Increased liquidity options – ULIP plans have a lock-in period of 5 years. Partial withdrawal is permitted after that. The five year lock-in period allows you to stay disciplined and regularly invest for a long period. The longer the time you stay invested, the higher the returns from the financial market.
  
  

  And after the lock-in period, you can withdraw the fund as required to fulfil your money goals. Though there is an option to withdraw the funds partially, it is best to stay invested for the longer term to accumulate returns.
  
  

• Online compatibility - Insurance providers offer the option to purchase, manage, withdraw and claim the financial benefits related to the ULIP plans online. Therefore, you can manage your fund allocation online, monitor the status of your invested fund value, make the necessary switches between the fund options, etc. It is simple and easy to transact, effortless to manage and cost-effective in the long run.
  
  

  At Tata AIA Life, we have a seamless and hassle-free process to purchase, manage and settle the claims. Our applications are user-friendly and extremely cost-effective. You can also utilise the top-up functionality to increase the investment based on increasing financial commitments online.
  
  

• ULIP tax* benefits - Like any other life insurance plan, the premium you pay and the payout benefit will qualify for the tax* deduction and ULIP tax* exemption benefit under the Income Tax Act, 1961, subject to certain terms and conditions.
  
  

  For instance, the tax* deduction is applicable when the annual premium payment does not exceed 10% of the sum assured. Therefore, you must understand the tax* benefits based on the provisions to benefit maximally.
  
  

While ULIP plans have such flexible financial benefits, they have several inherent charges related to policy administration, fund management, etc. Although the fund charges add to the cost, it is worth the investment, considering the life cover and market-linked return benefits. In addition, you can get the expert advice of the fund managers to invest in the right funds, stay protected and benefit maximally.

Conclusion

ULIP plans are comprehensive life insurance solutions that provide life cover and market-linked returns. In addition, it offers flexible financial benefits that make it popular for long term returns. Investing based on the risk appetite, switching between the fund options, paying the premium conveniently, managing the fund options online, receiving applicable tax* benefits and increased liquidity options make it a comfortable financial instrument to invest in and benefit in the long term.

Therefore, desire to invest in ULIP plans, choose the right fund option, stay aware of the market conditions, make the necessary changes in the fund option and stay invested to benefit over the policy tenure!

L&C/Advt/2022/Jul/1559