Do ULIPs Really Provide Good Returns?
Published On Apr 12, 2021 12:00 AM By InsuranceDekho
Table of Contents
ULIPs provide dual benefits of an investment and life insurance cover, your investments multiply through market linked returns along with comprehensive life insurance cover. Apart from the fund value provided by the ULIP at the maturity, there are various different benefits which assists wealth maximisation.
Also Read:- How Does A ULIP Work?
Reasons Why It Is Worth Investing in ULIPs
Following are the reasons why you can consider investing your hard-earned money in ULIPs -
1. Fund Options
Most of the ULIPs provide an array of fund options under their plan to provide the policyholder with the substantial flexibility in investment horizons. The details such as name of the fund, description of the fund, % of premium allocated in each fund, and risk and returns involved are explained in the plan brochure.
2. Partial Withdrawals
Almost every individual gets in the need of emergency funds, these kinds of requirements are fulfilled by ULIPs via its partial withdrawal feature. These withdrawals can be made as per the terms and conditions of the plan.
3. Long Term Investment
ULIPs have a lock-in period of 5 years where no withdrawals can be made and the premium allocated is locked in the fund options chosen by you at the inception of the policy. A ULIP gives considerate time to an investment in order to grow and maximise the wealth of the policyholder. ULIPs can be considered to achieve long term goals such as buying a house, marriage, higher education of your children, retirement, etc.
4. Fund Switching
ULIPs usually come with the option of fund switching where you have the liberty to replace your current fund option with another one. The policyholder can switch the fund options as per their risk assessment and prevailing market conditions.
5. Sum Assured
If you choose asset allocation in ULIPs, the plan provides a fixed amount known as ‘sum assured’ which is provided by the insurance company to the nominee in case of an unfortunate demise of the life assured.
6. Tax Benefits
The investments made in ULIPs are eligible for deduction under the section 80(C), while the returns on the policy are exempt from taxation on maturity under section 10(D) of Income Tax Act.
7. Additional Benefits
ULIPs provides some additional perks to its policyholders such as top-up options, premium redirection option, premium reduction, and riders etc. These benefits enhance your plan while providing customised features.
You May Also Like to Read:- What is Fund Switching in ULIPs?
All About LIC Unit-Linked Insurance Plans
ULIPs are specifically designed to maximise your hard-earned money by allocating it to various fund options. The returns provided by the investments are market linked i.e equity funds provide more returns as compared to debt funds. You can choose the fund option based on your risk appetite and goals. Yes, ULIPs provide good returns but it totally depends if you prefer taking risks and investing in equity related fund options.