Investment is important because it has significant benefits in conserving or increasing your current cash. You might also invest to secure your safety, such as by purchasing insurance.
Insurance is now a must-have. Many people believe insurance is only for life and does not offer investment benefits. ULIP or Unit Linked Insurance Plan aims to offer the policyholder the combination benefits of wealth growth and life insurance. ULIP investment can provide insurance coverage as well as help you reach your life goals through market-linked returns.
Unit Linked Insurance Programs (ULIPs), are a new investment tool that has been widely adopted because of their ability to achieve both. Continue reading for more information about ULIPs and the many benefits of ULIP Investment.
What’s a ULIP?
Unit Linked Insurance Plans have become a very popular type of investment plan. This is because they offer both the benefits of insurance and the opportunity to invest for your life goals. The ULIP can be customized to suit your individual needs and risk tolerance.
You have the option to choose the Unit Linked Insurance Plan funds that you want to invest. You may choose to invest a portion of the mixed option in one or both instruments, depending on your risk tolerance.
How does ULIP Work?
It’s easy to obtain a Unit Linked Insurance Plan. Continue reading to learn more about the procedures involved.
- When selecting ULIP insurance you need to choose how much you are willing to pay as a premium, and how often. You can pay your premium in one lump sum or at regular intervals of monthly, quarterly and semi-annually.
- Your premium will be split into units that are allocated to different funds. These funds can be stock-based, debt-based, or a combination fund that invests equally in equity and/or debt assets.
- You may be able to swap between Unit Link Insurance Plan funds, depending on your risk profile and life goals. You may also transfer funds, depending on market performance. This is if you feel that investing with a different fund would offer you better returns.
- You must first understand the lock-in time for ULIPs. During the lockin period, you cannot withdraw funds. All ULIPs lock in for five years.
- When your Unit Linked Insurance Plan matures you will receive the fund’s value. You can redeem the units with funds that were granted to you.
The Benefits of ULIP
ULIPs are a highly-popular investment vehicle because of many factors. Unit Linked Insurance Plans provide many benefits. We will be highlighting some of these here.
1. Flexibility
ULIPs allow you to choose what you would like to do with your money. There are many ways to invest aside from the money you have set aside for ULIP coverage.
You can always switch between the funds that you’ve selected even after investing. It is possible to make a wise financial investment if you invest in equities funds at a boom time. But, in the event of a market crash, you might choose to move your investment to a more risky fund like debt securities. These funds offer guaranteed returns and are less volatile.
Flexible investing is possible even if your risk profile changes. You can also be flexible if your risk profile changes. For instance, a younger professional could afford to make a less risky investment than someone near retirement who has more financial responsibility.
2. Liquidity
ULIPs are a way to provide liquidity for investors. They allow them to withdraw a portion of their funds in the event they need it. It’s possible to get cash quickly in emergency situations. It’s always a smart idea to have liquid funds available that can be taken from your ULIP for such situations. Once the 5-year lock period expires, however you can make partial withdrawals from ULIP.
3. Taxation Benefits
Investors are always looking for tax-saving opportunities when they invest. Section 80C of The Income Tax Act of 1962 provides that premiums for ULIP Insurance are exempted of tax until Rs. 1.5 lakh.
In addition, Section 10D of the same statute allows tax deductions for pay-outs regardless whether they are prematurely made or given to the policyholder (or their nominee). These tax benefits are subjected to the Income Tax Act, 1961, as amended from occasion to occasion.
4. Life-Goal Investment
Your ULIP investments and insurance are directly connected to your life objectives. This means that your ULIP investment and insurance can be chosen based on your life objective, such as saving money for your child’s education and marriage or your retirement.
To save for a holiday, you might also consider buying a Unit Linked Insurance Plan. A ULIP that aligns with a life goal can help you save and guarantee that you will reach your goals without sacrificing any vital components.
5. You get a double advantage with one offer
ULIPs are the best way to combine investing and insurance into one package. It can meet both of your requirements simultaneously, making it easier to live comfortably. It offers low-cost coverage while allowing you to invest in funds you prefer. A ULIP gives you security for your family and offers the Unit Linked Insurance Plan Advantage of market-linked assets.
6. Maturity Benefits
A ULIP plan includes maturity rewards if the policyholder lives beyond the plan’s maturity date. The maturity benefits are usually paid to the insured in the sum of the fund’s value. Certain insurance providers may offer additional benefits, but these depend on the terms of the contract.
Wrapping It up
You should start investing in a Unit Linked Insurance Plan early to reap the benefits and reach your goals. ULIP strategies will best serve your long-term ambitions. If you know how ULIPs work, it is time to make your investment.
ULIPs offer a great alternative to traditional investments because of the ULIP feature. Canara HSBC’s ULIP Plan features may be a good choice to protect and secure your financial future.
