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In ULIP, Where Will My Money Be Invested?

Published On Mar 08, 2022 10:30 AM By InsuranceDekho

ULIPs are one of the best market-linked investment programs because they offer both safety and returns while also enabling investors to be versatile. Because they are market-linked, they have a strong potential of providing large profits. Investors may choose between funds, determine the amount of investment, and withdraw cash in stages or in whole using these investment funds. The coverage might be increased or reduced at any moment, depending on the needs and requirements. Because the investor bears the risk of the investment, he or she must be more actively involved with the product. They are usually bewildered as to which ULIP is best suited to their needs. Finding the coverage that best meets your needs and budget may be tough, especially when markets are always offering new products.

Where Will My Money be Invested in ULIP?

Some things to know about where your money will be invested in a ULIP are as follows:

1. Changing Funds

Another distinguishing element of ULIP investments is the flexibility they provide. You have the option to move funds whenever it is most convenient for you. Depending on the market scenario, you can pick between debt, equity, and hybrid funds at any moment. Depending on your objectives, choose a qualified adviser with great asset allocation skills who can aid you in reaching optimal investment results.

2. Period of Lock-In

ULIPs have a five-year lock-in duration. You will not receive any payments during this time. You can either withdraw money or relinquish the insurance when the lock-in period expires. The purpose of a ULIP is to invest over a lengthy period of time, at least five years. If you have the right allocation mix based on your long-term goals, you may generate substantial returns over a long period of time.

3. Tax Advantages

Section 80C of the Income Tax Act of 1961 allows for a deduction for premiums paid into a ULIP fund. A maximum deduction of INR 1.5 lakh is allowed under this clause. In addition, under Section 10(10D) of the Act, the policy's returns are tax-free.

4. Planning with a Purpose

ULIP funds are designed to help you reach long-term goals including asset creation, retirement planning, and school finance for your children. You may rest easy knowing that your premium is helping you achieve your long-term goals. Before choosing a fund that meets your needs, you should define your short- and long-term objectives. Expert financial specialists will invest the cash wisely to guarantee that you get a good return.

5. Diverse Investment Options

When you invest in a ULIP, you may select from a wide range of funds available on the market. Based on your long-term financial goals, you may select the fund that best suits your risk appetite.

Take Away

ULIPs provide liquidity and transparency, which are two important advantages. It has a charge structure that is revealed before the product is purchased. You'll also find out how much the investment is worth and what the estimated rate of return is. In addition to the daily Net Asset Value, you will receive a quarterly investment portfolio and a yearly account statement (NAV). This will keep you informed about the status of your assets. Investing in ULIP funds to meet long-term goals is a smart financial move. A ULIP can help you reach your objectives, but you'll need to invest for a long period to profit from compounding. Because it combines insurance and savings, a ULIP is an excellent investment choice. Purchasing a ULIP, as you can see, is a long-term commitment.

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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