Different Uses of ULIPs
Published On Jun 18, 2021
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Unit Linked Insurance Plans (ULIPs) are a unique type of plan wherein not only do you get life cover through an insurance component but can also invest in market-linked funds. ULIPs are a popular choice due to the flexibility they offer and their many uses. In a ULIP, you can choose the degree of risk you are willing to undertake as the choice of the investment fund depends on you.
Different Uses of ULIPs
You can use a ULIP for a variety of purposes, following are some of the popular uses of a ULIP -
1. For Investment in Market-Linked Funds
One of the most popular uses of ULIPs is, of course, their investment component. With a ULIP, the policyholder can invest in the market-linked investment fund of their choice. There are usually many types available such as equity funds, debt funds and more. The returns from them also depend on how they perform in the market.
2. For High Returns
ULIPs promise high returns to policyholders. Although it largely depends on their choice of investment funds and also, their risk appetite, ULIPs, in general, have higher returns than most insurance plans. Moreover, the choices of funds and even fund-switching make the plan more appealing and useful in the long run.
3. For Partial Withdrawal Facility
With partial withdrawals, you can take out a certain amount from your funds, anytime, without having to liquidate your entire savings. This is especially important if you are facing any financial problems and feel that you may not be able to pay your premium. Most insurance or investment plans do not offer this use. In fact, you have to either pay high penalties or cancel your plan if you want to get partial funds withdrawn.
4. For Meeting Financial Goals
ULIPs are very useful in meeting your various financial goals. With an avenue to create wealth and get funds at important milestones of your life, ULIPs always assist policyholders. Retirement planning, funds for your children and also, future financial security is ensured through a ULIP. Not only does it save your wealth, but also helps it grow.
5. For Tax Benefits
A major use of ULIPs to take advantage of their tax benefits. This facility helps keep your funds secure. ULIPs get tax benefits under Sections 80C and 10(10D) of the Income Tax Act of India. They are available on your premium and maturity amounts, respectively.
Due to these many different uses of ULIPs, they are a profitable buy. Besides getting the many features typically associated with insurance plans, you can use these plans for all the above purposes. ULIPs are an affordable and efficient way to take the best care of your financial assets.
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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.