How ULIPs Can Help Secure Your Child's Future
Published On Jan 19, 2022 11:00 AM By InsuranceDekho
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With so many investing options available, accumulating assets to guarantee your child's future can seem daunting. When it comes to saving for financial goals, however, a ULIP (Unit Linked Insurance Plan) plan outperforms other options. A ULIP combines investment and life insurance to ensure that your child can pursue their aspirations even if you are not around. A ULIP can assist you in building a corpus for your child's education, allowing them to reach their goals. The waiver of premium option is available with ULIP-based kid plans to offer financial security in the case of the policyholder's untimely death.
Many ULIP investment products take into account parents' financial ambitions. It is critical to conduct an analysis of the top-performing ULIP funds to guarantee that you select the best ULIP. Using a ULIP calculator, you may compare insurance and determine your ULIP returns. Whole-life ULIPs, which are popular for their long-term advantages because the insurance remains active for the policyholder's whole life, are also an option. Death payments, as well as survival and maturity rewards, are guaranteed in whole-life ULIPs.
To avoid unpleasant shocks in the future, conduct enough research, compare policies, analyze long- and short-term financial goals, and take into account elements such as ULIP charges.
How ULIPs Can Help Secure Your Child's Future
The following are a few reasons how ULIPs can help secure your child's future:
1. ULIP Investment As A Child Plan
The most important financial aim for a parent is to create an elaborate savings strategy to protect their child's future. Parents must consider their children's educational goals, particularly in terms of paying for their higher education. Choosing from India's profusion of savings schemes, on the other hand, can be difficult and depressing. The ULIP can be an excellent starting step in such a situation. ULIPs are simply savings plans that serve to instill investment discipline. Because the most basic ULIP has a five-year lock-in period, ULIPs work in stages to build wealth.
ULIP investments are one of the greatest saving schemes in India; yet, their previous history of being opaque and expensive prevented investors from investing in them. Since then, modern ULIPs have come a long way. With no premium allocation and policy administration ULIP charges, they have now become an inexpensive investment. Under Sections 10(10D) and 80C, respectively, of the Indian Income Tax Act, 1961, policyholders can enjoy tax-free ULIP returns as well as premium tax exemptions on premiums paid to keep the policy alive.
As the ULIP investment grows, the child's corpus grows as well, ensuring that he or she has enough money to pursue their aspirations. Planning ahead of time and investing in high-performing ULIP funds over time can reduce stress and allow you to spend more time with your child.
2. Benefits Of ULIPs As A Child Plan
There is a common misperception that the best ULIP is expensive and that it requires a large investment to be effective. However, you do not need to invest a significant sum to maximise your ULIP profits; instead, you should begin investing early. Furthermore, having tax-free ULIP returns is another perk that allows you to save more and gain more from your ULIP.
3. Waiver Of Premium Benefit
The sum promised is paid to the selected beneficiary in the event of the policyholder's death, while the insurance company pays the due premium for the remaining policy term.
4. Investment In A Diverse Portfolio
ULIPs allow you to invest in a wide portfolio and maximize your wealth appreciation to help your child build a bright future. The feature of auto fund rebalancing ensures that your assets are unaffected by market movements by specifying your investing preferences.
A ULIP is a type of financial instrument that combines investment and life insurance into one package. You must make monthly premium payments when you purchase a ULIP. A portion of the premium is used to provide life insurance, and the rest is invested in funds that are either equity-oriented, debt-oriented or a combination of the two. Policyholders can decide how much and where to invest their money based on an appraisal of their financial obligations and risk portfolio. It is best to begin early in your ULIP to maximize your earnings. A ULIP gives you the freedom to swap funds as your financial circumstances change during your life.
Also read- 5 Things You Must Know About Tax Benefits Of ULIPs
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.