How Can ULIPs Help You Fulfil Your Long-Term Financial goals?
Updated On Jul 07, 2021
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ULIPs are usually in favour with long-term investors. When compared to their peers, these plans' net returns remain strong. Under ideal circumstances, these strategies work effectively and provide good returns over time.
ULIP plans employ the use of funds to fetch higher returns to the policyholder.
Your premium will be invested in one or more funds of your choice. The funds are classified into three types: equity-oriented, debt-oriented, and a mix of the two. Depending on your risk tolerance, you can select one or more funds.
How Can ULIPS Help You Achieve Your Long-Term Financial Objectives?
Following are the characteristics of ULIPs that promote long-term financial goals.
1. Flexibility To Switch Funds
ULIPs provide you the flexibility to switch from one fund to another, such as from stocks to debt and vice versa, based on market conditions or your investment objectives. As a result, you can modify the ratio of your invested money without paying any further charges using this option. This can maintain the interest of the policyholder for a long time as they can switch funds by speculating returns.
2. Initial Lock- In Period
The term 'lock-in period' in the context of a ULIP refers to a time period defined by the company during which the policyholder is unable to receive the benefits of partial withdrawal.
It usually refers to a 5-year period beginning on the policy's commencement date during which the proceeds of the policy cannot be paid to the policyholder until the policyholder dies or the policy's covered events occur.
This characteristic of a secure lock-in period might aid in the development of a long-term saving and investment habit
3. Tax Free Withdrawals
Insurance policies come with built-in tax advantages. As a result, ULIPs are eligible for tax exemption under Section 80C of the Income Tax Act. This applies to the premiums that have been paid under this plan. In addition, tax advantages are available on maturity benefits.
4. Top- Up Facility
Investors can use a feature known as top-up, which allows you to deposit money in addition to the premium you pay, increasing your savings account balance. This feature allows you to park any increments without having to purchase a new insurance.
ULIPs are designed to help you invest your money in a disciplined manner and are designed to address key financial goals. In the absence of such an approach, your long-term goals may be jeopardised in order to meet immediate requirements. ULIPs will prove to be an excellent investment alternative for your long-term financial objectives.
Also read - How Are ULIP Plans A Smart Investment Option?
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.