How Much Return Does ULIP Guarantee?
Updated On Nov 19, 2021
Table of Contents
A Unit Linked Insurance Plan (ULIP) can assist you in achieving a variety of long-term investing goals, including retirement planning, paying for your child's education, and accumulating wealth and assets. The 5-year minimum lock-in period maintains investor discipline while still producing good market-linked returns. The main benefit of the best ULIP is that it provides life insurance while also investing a portion of your money in debt, equity, or balanced funds. ULIPs provide financial stability to your family even if you are not present, as well as increase your income and assist you in achieving your long-term investing goals.
It is one of the most popular investment tools on the market because of the twin benefits of market-linked returns and a life insurance policy.
According to industry experts, you should invest in these plans for at least ten years. ULIPs are predicted to produce long-term returns of 10% to 12%. Other market products such as Equity Linked Savings Schemes (ELSS), term deposits, and tax-saving funds offer superior returns than the best ULIP.
How Much Return Does ULIP Guarantee?
Here is everything you must know about the returns in ULIP:
Under Section 10 D of the Income Tax Act of 1961, the amount you earned on the maturity of your Unit Linked Insurance policies is tax-free. You can potentially get tax advantages on premium payments in addition to this tax relief. Premium payments of up to Rs 1.5 lakh in a financial year are tax-free under section 80 C of the act. Partially withdrawn funds are likewise tax-free if they are not used to pay off the entire policy.
Fund Switching Option
If you exercise the fund switching option in ULIPs over a 10-year investment horizon, you can earn high profits. You have the option of investing in debt, equity, or balanced funds at first. The option of fund switching can then be used to rebalance your portfolio in accordance with changes in your risk appetite and investing objectives. You could decide to swap investments after evaluating the effectiveness of ULIP funds. Fund shifting options include the Systematic Transfer Option (STO), Return Protector Option (RTO), Auto Fund Rebalancing (AFR), and Safety Switch Option, to name a few (SSO).
Investing, saving, and having a life insurance policy all have three advantages: The greatest ULIP can provide you with fast, market-linked profits while also ensuring your family's financial security in the future. ULIPs, like life insurance policies, can give financial support to your family in the event of a disaster. Furthermore, the five-year minimum lock-in period instills the habit of saving, which is critical for wealth creation.
You can select from a variety of ULIPs to meet your specific investment goals. You also have the option of choosing your policy duration and premium payment period.
Charges On ULIPs
ULIPs may be subject to a variety of charges, depending on your insurance. Administrative fees, fund management fees, switch fees, premium allocation fees, partial withdrawal fees, and surrender fees are among them. The costs of the top ULIP, on the other hand, are transparent.
By investing in the greatest ULIP, you can achieve your wealth-building goal over a ten-year investment horizon. The plan includes important features such as mortality fee refunds, loyalty bonuses, and wealth boosters. You can also choose to earn maturity benefits in installments or at your chosen frequency over a maximum of 5 years if you choose the setting 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.