What Is A Ulip?

In today’s market, there are multiple insurance policies and multiple investment schemes available. If you’re an individual who wants the best of both worlds, then ULIP is your best option.

ULIP stands for Unit Linked Insurance Plan and is a unique combination of an investment opportunity and life insurance. In this, a portion of the insurance premium is allocated towards the life insurance cover and the remaining portion is used for investments in stocks, mutual funds, or other market schemes as per your interest.

If you’re planning to purchase a ULIP this year, you need not visit an insurance company’s office or contact their representatives. You can easily find all the necessary information online on the company’s website.

If you wish to compare different ULIPs and want to purchase one in a hassle-free manner then you can visit online broker websites such as Coverfox.com. It is a good practice to compare all the available options before purchasing one. This way, you are aware of the features offered by various insurance companies and can make an informed decision.

Some Of The Reasons To Buy Ulip

ULIP in India has gained momentum over the years and has become one of the preferred investment options. There are multiple reasons for this. These are:

1) Flexibility

In most of the investment schemes, you are stuck with the same fund for a certain period of time. You cannot switch to another fund easily and might end up missing out on a golden opportunity. With ULIP, you have complete control over the investment portfolio and can easily switch between debt and equity funds.

2) Tax Benefits

Tax can be deducted on the profits gained through most investment schemes. With ULIP, you will get tax benefits on your life insurance plan under section 80C and 10(10D) of the Income Tax Act, 1961. Even if you make an exit before the maturity of the scheme, the amount you receive will be exempt from taxes.

3) Disciplined Savings Method

Most investors opt for ULIP as a long-term investment. This offers a disciplined savings method wherein you can save for a particular goal in the future. In many cases, such as ordinary savings, you will end up using it completely in case of an emergency.

ULIP schemes have a minimum lock-in period of 5 years. Due to this lock-in period, you won’t be able to withdraw the money in that period. This way, you become a disciplined investor.

Significant wealth cannot be made overnight and it requires disciplined long-term investments. With ULIP and its disciplined savings method, you will be in a position to earn significant returns over the years.

Benefits Of Buying Ulip

Since ULIP offers a unique combination of investment and life insurance cover, this product has multiple benefits. These are:

1) Better returns

Compared to other investment schemes, ULIP in India has given better returns. Due to its equity advantage, the investments made in ULIP tend to perform better. The portion of your insurance premium is invested in funds spread across different asset classes. It is beneficial to look for a new fund each year.

2) First-time investors

These days, there is a surge in individuals who are shifting from FD-based investment methods to other forms of investment. Most of them opt for mutual funds. The returns gained through a ULIP investment, though not equal, is definitely comparable to the returns gained through mutual fund investments.

3) Free-look period

This is one of the best benefits of opting for a ULIP. You will get a free-look period of 15 days within which you can opt out of the policy if you are not happy with it. The entire insurance premium you have paid will be reimbursed to you in this situation.

A Smart Choice

Although there have been multiple technological advancements over the years, you still cannot predict what will happen tomorrow. If you pass away due to a mishap, your family should be taken care of and they should be financially independent. Although the best way to ensure this is to opt for a regular life insurance plan, you need not settle for it as you can use the insurance premium as an investment as well. This way, if you’re still around after the ULIP has matured, you will get your investment back along with the benefits. All these earnings will be tax-free and it will be a substantial amount as you would have been making insurance premium payments for a long period of time.