A Complete Guide on Whole Life ULIP Plans
When you think of your life a few years down the line, where would you want to be? Is it at that dream home you always wanted? Or those countries you always wanted to travel through? Or is it spending the mundane yet blissful moments taking care of your family and giving yourself time? Whatever may be your goal, a ULIP plan can help you fulfil that. Whole life ULIP plans are what you need to achieve your dreams and take care of your loved ones. As ULIP insurance plans give you the best of both worlds, bringing together life insurance protection and goal-oriented wealth creation, they are becoming more and more of an ideal investment. Read on to find out more about ULIP investments and how you can benefit from them.
What is a ULIP Plan? How does it Work?
A ULIP plan is short for a Unit Linked Insurance Plan. A ULIP plan is an insurance cum investment product with features of pure life insurance and market-linked income growth. It gives you the dual advantage of goal-based wealth creation and life insurance to secure your loved ones.
A ULIP policy works in a very simple manner. First, it requires the payment of periodic (regular) premiums by you in monthly, quarterly, half-yearly, or yearly instalments. Premiums are the money you pay to avail of the benefits under the ULIP policy.
Once you pay these premiums, they get used for fulfilling two purposes. One is to give you guaranteed1 life insurance protection in the form of a fixed death benefit (sum assured) in the eventuality of your unforeseen demise for a fixed term. This term can be anywhere between 10 to 40 years. But when you consider whole life ULIP plans, they cover you for your lifetime (up to 99 years).
The death benefit is a monetary benefit given to the family members you choose (or nominate) while buying the ULIP insurance policy. The other part of those premiums goes towards the equity, debt or hybrid funds (all market-linked investment avenues) to grow your invested money.
This money increases through the power of compounding. It then gets returned to you after the completion of the ULIP insurance plan. Called ULIP returns, they are money accumulated over the years through investment in market-linked avenues.
What are the Benefits of a ULIP Plan?
Now that you know how a ULIP plan works, it becomes easier to see the number of benefits it provides
Long-term wealth creation: As mentioned above, one of the main aims of a ULIP policy is to create and accumulate increased wealth to help you tick off your long-term goals. The duration or term of a ULIP policy is not short at all, so before buying one, you must be sure about wanting to commit for the long term.
ULIPs only give profitable returns if you stay invested in them for a long time, at least 10 to 15 years. Once the duration of your ULIP policy expires, you receive the ULIP returns in the form of a one-time lump sum payment called a maturity payout. This maturity payout can help you strike off any goal you have.
Life insurance protection: Another core purpose of a ULIP insurance plan is to provide guaranteed1 life insurance protection. With life insurance, your family remains protected in your absence caused due to death, accidental death, or an eventuality of a serious and restrictive nature.
Most ULIPs also provide financial support by giving an additional sum separate from the maturity benefit if you develop a permanent physical injury due to an accident, or if you get diagnosed with a critical/ terminal illness of a life-threatening nature.
Some ULIP insurance plans, like the ones from Tata AIA Life Insurance, also go the extra mile and waive off the payment of premiums if you get debilitated due to an accident or harmful illness or if you need your hospital expenses taken care of.
Tax-saving* and tax* benefits: Another incentive of getting a ULIP insurance plan is the two very lucrative tax* benefits, subject to certain conditions, it provides under two provisions of the Income Tax Act, 1961. Under Section 80C of the Act, you can claim some of the premiums you pay towards the ULIP policy as refunds. This limit is up to ₹1,50,000 in a year and is a great way to save tax*.
Is ULIP insurance a Good Investment?
Sometimes, you might be a little hesitant in closing in on a ULIP policy. All the more so if you are averse to taking any risks and losing your hard-earned money due to the nature of market-linked investments and their fluctuations.
Market-linked plans are known to fluctuate and get affected by changes in stock prices, demands, consumer interest, and so on. However, any market-linked plan, if invested in for a long period (at least above 10 years) gives high returns.
So yes, ULIP investments are good, but only if you plan to stay in them for the long run. If you want a short-term investment to encash in less than five years, ULIP plans are not for you as surrendering them before time might bring you financial loss and attract penalties.
Tata AIA Life Insurance Fortune Pro ULIP
Combining the benefits of ‘Rakshakaran’ and wealth generation, Tata AIA Life Insurance Fortune Pro(UIN-110L112V04) ULIP offers the following features:
Choice of 11 funds for investment based on risk appetite and financial goals
Life insurance coverage up to 75 years of age
Consistent Loyalty Additions to the fund over time
Choice of Single Pay, Limited Pay or Regular Pay premium payment options
Ability to opt for guided and systematic investment under the Enhanced SMART feature
Choice of 5 unique riders# to enhance the coverage and protection
To sum it up:
Whole life ULIP plans and ULIP funds are an excellent investment. They strike two birds with one stone and can fit your budget and requirements very well. However, before you buy a ULIP plan, compare several of them before settling on one to get the most value out of your money and time.