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How Secure Are ULIPs?

Published On Nov 29, 2021 9:00 AM By InsuranceDekho

The investment world can be a volatile environment. This is why many people continue to avoid them and invest their money in instruments with low to no returns. As a result, they are unable to outperform inflation, and their money is idle. A ULIP, on the other hand, is one of the few investment-linked plans that provide both high returns and life insurance. A ULIP policy can provide you with consistent returns on your investment while also protecting your loved ones. A ULIP investment is an excellent short-term and long-term companion due to its low charges. Furthermore, long-term capital gains tax is levied on ULIP returns, while the death benefit is tax-free. With a variety of fund options, ULIPs help manage volatility.

How Secure Are ULIPs?

Below are a few points to note about ULIP and its security:

  • Changing Between Debt And Equity Funds On A Regular Basis

When you invest in ULIPs, you can select the funds into which your money will be invested. You can, for example, invest in equity funds if you have a high-risk tolerance. This ensures high profits at a higher risk. When people are young and have a long time ahead of them, they usually choose this option. Debt funds, on the other hand, are a low-risk investment option. These lower your portfolio's risk quotient and are preferred when you are nearing your goal.

The ULIP fund switch option can be used several times during the policy term, allowing you to take advantage of the current market situation. This increases your profits and returns.

  • Simple Methods For Withdrawing Funds

After the lock-in period of your ULIP expires, you can withdraw your funds whenever you want. If you take money out before the maturity date, the insurance company charges some surrender fees and returns the rest of your money to you. This improves flexibility. 

  • Allow You To Invest In A Methodical Manner

You can choose between making regular premium payments and investing in a lump sum. ULIPs provide affordable premium options. The minimum ULIP investment is as low as 1000. This makes it risk-free to invest in these plans because it spreads the risk over a long period of time. Furthermore, ULIPs are appropriate for all income levels. In a ULIP, you can invest as little or as much as you want.

  • Provide A Good Return

ULIPs offer extra rewards in the form of retention bonuses, riches boosters, assured additions, and so on. These are rewards that are added to your fund over time. Insurance companies like to reward their investors for staying invested in the plan for a long time. These incentives can significantly boost the value of your fund. They also increase your earnings.

  • Provide Tax Breaks For ULIPs

ULIPs have numerous tax advantages. The premiums paid for the ULIP are tax-deductible under Section 80(C), and the death benefit in the ULIP is tax-free under Section 10. (10D). Furthermore, the returns are taxed in accordance with long-term capital gains taxes. However, the tax on maturity benefits is only applicable if the total annual premiums exceed 2.5 lakhs and the policy was purchased after February 1, 2021.

  • Ensure The Safety Of Your Loved Ones

The funds invested not only provide financial growth and fuel your personal goals, but they also ensure that your family is cared for while you are away. A ULIP ensures the safety of you and your loved ones. 


ULIPs are completely risk-free devices that can provide you with peace of mind and long-term security. They protect your family and allow you to increase your monetary status by providing a variety of fund options and low premiums. They also help in changing your risk based on your changing income, needs, and requirements. If you are looking for a safe investment option, a ULIP can definitely fit the bill!

Also read: How To Buy ULIPs Plans Online 2021?

Why Should One Choose ULIP Over SIP?

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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