Why Do Wise Investors Choose ULIP Plans?
The ever-changing global scenario poses several uncertainties in our lives. Whether in economic conditions or in our health and lifestyle, emerging circumstances have taught us important lessons.
So, what is the greatest preparation to meet these challenges? Is it substantial financial stability to overcome dislocations? The answer is certainly a big yes! The key here is therefore to invest money. And, the right financial instrument will make a much-felt difference.
What are the best choices? You would have heard that wise investors opt for the ULIP plan? So, what is the ULIP policy, and why do investors prefer investing in ULIP? Let us get ahead and understand the plan better.
What is a ULIP Plan?
A Unit Linked Insurance Plan(ULIP) is an insurance plan that provides dual benefits for the investors: market-linked investments and life insurance. It is considered one of the best comprehensive life insurance policies due to its extended benefits. One portion of the premium is used as a life cover, and the other is invested in the financial markets. So, you get market-linked returns for the premium component that is invested. In addition, many flexible features of the ULIP policy help you customise the policy for your individual needs. Let us understand more about ULIP plans.
What are the Features of a ULIP Plan?
ULIP insurance is considered an option for wise investors due to its distinct features:
Dual benefits - The ULIP policy provides a life cover that ensures a lump sum death benefit to the nominee in case of your unexpected death. In addition, a part of the premium invested in the securities market will provide returns based on the fund value.
Rider# benefits - The add-on rider# benefits will extend the benefits of the life cover insurance policy. There are different insurance riders# options such as the total and permanent disability rider#, terminal illness rider#, accidental death benefit rider#, critical illness rider# etc. These rider# options provide financial support based on the situation by making the insured amount payable during the policy term. For example, the critical illness rider# will provide you with the fund for helping you pay for the medical expenses when you are diagnosed with a critical illness for the first time in your life.
Investment options - Insurers provide different types of funds that you can invest in based on your risk appetite. For example, you can choose the equity funds for high risk, hybrid funds with equity and debt combination for moderate-risk and debt funds for low risk. The higher the risk you take, the better are the returns.
Fund switching options - ULIP policy provides the option to switch between the funds during the policy term based on the market volatility and the fund performance. For example, if you have chosen an equity fund option and find it not performing well, you can switch to a debt fund to secure your investments.
Lock-in period - The ULIP policy provides a lock-in period of five years. It means partial withdrawal from the fund is allowed only after five years. It is considered a good feature because it encourages and helps people develop the financial discipline of staying invested for the best returns in the longer term.
Why do Wise Investors Choose ULIP Plans?
Having read about the basic features of the ULIP plan, let us try to understand why wise investors opt for the ULIP policy.
Flexibility - Choosing between the funds based on your risk appetite and the market volatility ensures a secure investment option. This flexibility will provide consistent ULIP returns when you utilise the feature wisely.
Long term benefit - The ULIP policy has a lock-in period of 5 years which ensures that you stay invested in the long term for higher returns.
Ensuring family's financial security - With the ULIP policy, you get the benefit of investing and ensuring financial protection for your family in your absence simultaneously. You can decide the premium based on your family's financial commitments in the long term, such as your child's higher education, marriage etc.
Tax* benefits - Wise investors can also seek tax* benefits from the ULIP investment. The premium amount paid and the returns qualify for a tax* deduction and tax* exemption under the Income Tax Act, 1969.
Flexible premium payments - Based on your steady flow income, you can choose to invest in the plan as a lump sum amount or as regular monthly payments. You can limit the period for the payment while staying insured.
Tata AIA Life Insurance Fortune Pro ULIP Plan (UIN- 110L112V04)
Tata AIA Life Insurance Fortune Pro (UIN- 110L112V04) is a ULIP that ensures the growth of an investment based on market-linked returns. This Tata AIA insurance plan offers 11 fund options. You have the flexibility to choose between the funds according to your investment needs. You can also opt for a systematic investment plan through an enhanced portfolio strategy. The premium amount can be paid as a lump sum amount or for a limited period. The plan also offers coverage up to the age of 75 years.
The ULIP plan is a comprehensive life insurance policy that provides dual benefits, insurance and investment along with life insurance protection. It is a preferred option for many wise investors because it offers unique features that secure your investment and help you earn higher returns. You can choose the funds to invest in based on your risk tolerance level and switch between the funds if there is a market fluctuation. The ULIP plan also helps you invest in the long term for better returns. Therefore, opt to invest in ULIP for insurance and investment benefits. Choose the best fund and stay invested!