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A stable financial condition is a key to an ideal living. It will satisfy your money goals while letting you stay at peace about your family’s financial future. However, financial stability has different dimensions to it. It should include regular income, savings and investment options. In addition, securing financial reserves is important to safeguard your family in your absence.
So, to accommodate such investment goals, insurers have introduced the ULIP (Unit Linked Insurance Plan) that benefits you with market-linked returns while having a life cover! It has flexible investment benefits.
What is the ULIP plan?
Unit Linked Insurance Plan(ULIP) is a comprehensive life insurance plan that offers dual benefits. First, it provides a life cover that pays the death benefit to your family in case of your unexpected death during the policy term. Second, it allows you to invest a portion of the premium in the financial markets for market-linked returns. You can invest in the funds based on your risk appetite. The ULIP plan has a lock-in period of 5 years, after which partial withdrawal is possible. Hence, it offers long term investment benefits with a life cover.
How to improve Your Gains from a ULIP plan?
Here are a few ways to improve the gains from such ULIP insurance policies.
- Research before you invest - Investing in the security market requires extensive research. First, you must understand the economic conditions and their impact on the global investment platform. Based on your steady flow of income and your money goals, you have to choose funds offered in the ULIP plan.
Analyse the fund returns and their applicability to fulfil your future money goals after accounting for inflation and choose the policy term. Such basic research and smart investment decisions will help you improve your returns while investing comfortably. You can choose the premium payment term and the mode of payment with the flexible options provided in the ULIP policy.
- Expert assistance - If you are always held up and busy with your professional work, you may not have the time to research your investment. In such cases, you can seek expert guidance. We offer the assistance of fund managers exclusively to handle your investment choices based on your financial status and long term goals.
- Invest based on risk - One of the apt benefits of the ULIP plan is the option of investing in funds based on the risk profile. There are equity funds for the risky investors, debt funds for the less-risky investors.
- Switch between options - The ULIP policy is a different investment plan because it provides the option to switch between the funds during the policy term based on the economic conditions. For example, suppose you have chosen the equity fund and find that unfavourable market conditions will impact the gains. In that case, you can always switch to a debt fund to safeguard your investment and improve ULIP returns.
- Invest early - The earlier you start investing in the ULIP plan, more the returns you receive. Investing early in life will help you choose a longer policy term with lesser premium rates. Hence, it will be affordable and comfortable in the long term. It will also help you develop the discipline to invest for better returns at a younger age considering the inflation rate and changing global scenarios.
- Stay invested - Early investment benefits for improved gains can reach you only when you stay invested in the ULIP policy for a longer-term. We always tend to withdraw funds from the investment for temporary emergencies, which is not advisable. Therefore, the ULIP plan provides a lock-in period of five years, after which partial withdrawal is allowed. Even after the lock-in period, it is best not to withdraw the fund to improve your gains on maturity.
- Tax* benefit - The premium amount paid on investing in ULIP plans qualify for a tax* deduction under Section 80C of the Income Tax Act, 1961 upto ₹ 1,50,000. The sum received from the ULIP plan also qualifies for tax* exemption benefit under Section 10(10D) subject to certain conditions.
- For ULIP policies issued before 1 February 2021, the maturity benefit will qualify for tax* exemption if the premium does not exceed 10% of the actual capital sum assured.
- For ULIP plans issued after 1 February 2021, the maturity benefit will qualify for tax* exemption on satisfying the condition mentioned above, while the premium does not exceed ₹2,50,000.
- And, if you have purchased multiple ULIP policies, then the aggregate of the premium paid must not exceed the threshold limit of ₹2,50,000. Therefore, you can invest in different ULIP policies based on your risk profile, such as equity, debt or hybrid funds.
Conclusion
Investment in a ULIP plan is ideal for people looking for investment benefits with a life cover. It will help you invest in varied fund options based on your risk appetite while switching between them during an economic downturn. In addition, smart investment decision making and the usage of the flexible options available with the ULIP plan will help improve gains in the long term!
L&C/Advt/2022/Nov/2850
