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Are ULIPs A Good Investment Option For Long Term Wealth Creation

Published On Oct 15, 2021 10:00 AM By InsuranceDekho

If you want a safe, long-term investment, ULIPs are the way to go. ULIPs are best suited for those wishing to build money over the long term. This single plan combines savings and security into one convenient package. Unit Linked Insurance Plans, or ULIPs, are a type of insurance that also serves as an investment vehicle. It provides a significant return on life insurance while also assisting in tax reduction. ULIPs have, in fact, become one of the best investment possibilities in the present market.  

Are ULIPs A Good Investment Option For Long Term Wealth Creation

Here are a few reasons why ULIPs are a good investment option for long term wealth creation:

1. Lock-In Term

If you want to build a disciplined investing habit, a five-year ULIP is the best option. A single ULIP would suffice because it is a long-term investment choice. In most cases, the lock-in period is determined by the date the policy was issued, and the premium must be paid in a lump sum monthly or annually. Furthermore, following the 5-year lock-in period, the policyholder has the option of terminating the policy and withdrawing the funds as needed.

2. Flexibility

ULIPs are extremely versatile because they allow you to move funds at any time during the policy period. It is the only financial tool that provides this level of freedom. It enables you, the assured, to transfer all or a portion of your investment between funds. You can choose any of them depending on your requirements and fund performance. Growth, balanced, equity, and income funds are all included in this category. In fact, you can make three to four moves for free each year. All you have to do is pick a policy, adjust the fund allocation, and stick with it until your policy expires to reap long-term rewards.

3. Greater Returns Than Other Options

This is just another reason why ULIPs are an excellent choice for long-term wealth accumulation. ULIPs offer a higher potential for earning good returns than other products since they invest the premium you pay in a variety of asset types. It also allows you to switch funds each year based on their performance.

4. Tax Advantages

Under Section 80C of the Income Tax Act of 1961, ULIPs offer tax advantages. The best tax-saving choice is determined by a number of factors, including the lock-in duration, maturity benefits, and return amount. As a result, when compared to other investment options, ULIP is the greatest option because you just have to buy the policy once and receive tax benefits every year until the policy expires.

5. Dual Advantage

Term insurance plans provide life insurance as well as tax benefits, but they do not pay out any money. ULIPs can be beneficial for long-term goals, in addition to providing a tax benefit of up to Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961. For investors under the age of 45, it gives a minimum sum assured of ten times the annual premium.


As a result, with so many investment options on the market, deciding which one best suits your needs might be challenging. As a result, you may want to consider a ULIP as an investment vehicle because it strikes a good mix between providing insurance coverage and earning high profits. Furthermore, if you want to invest in a ULIP because it offers the greatest ULIP that offers you a wide range of investment possibilities as well as additional investment options, loyalty enhancements, and wealth boosters based on your demands.

Also read - 5 ULIP Charges You Must Know About

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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