Key Features Of ULIPs
Published On Jan 19, 2022 10:50 AM By InsuranceDekho
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You should examine your risk appetite and needs while making an investment decision.
You should also think about your future financial needs. HDFC Standard Life has a range of unit-linked insurance solutions to fit your needs, whether they are for retirement, health, education, marriage for your children, or investment.
ULIP has a plethora of advantages. Its growth potential, on the other hand, is one of the reasons it remains a popular investment choice. To expand your money, you can use these programs to invest in market instruments such as debt and equity funds. You might be able to meet your long-term financial goals thanks to the returns you receive.
Key Features Of ULIPs
The following are a few features of ULIPs:
1. Decide According To Your Risk Appetite
ULIPs allow you to invest in debt, equity, or hybrid funds in your preferred ratio. You can also change the structure of your ULIP at any time during the investing period, making it a very simple and flexible option to invest in. If you wish to invest aggressively at first, you can choose equity funds, and then move to debt ULIP funds when your risk appetite declines.
2. Exemptions From Paying Taxes
Section 80C of the Income Tax Act exempts ULIP premiums, meaning that any sum paid as ULIP premiums up to Rs. 1,50,000 is tax-free. In addition, unlike many other financial instruments, all ULIP withdrawals after maturity are tax-free.
3. Top Up Facility
You can also top up your existing insurance with additional premiums if you have a Unit Linked Insurance Plan. You can deploy more funds in your existing ULIP if your insurance is performing well.
You can also choose a single premium policy instead of paying in regular intervals with ULIPs. In this manner, if you have some spare cash, you can easily invest in ULIPs and expect high long-term profits.
5. Life Insurance, Investing, And Savings
Life insurance and savings are combined in unit-linked insurance plans, with market-linked returns. As a result, you can invest your money to make larger returns while still meeting your protection needs. Investment in unit-linked insurance plans encourages a consistent saving and investing habit, which is critical for long-term wealth accumulation.
6. Number Of Years
This is determined by the length of the policy you have chosen. The policy term and the number of premium-paying years (in the case of regular premiums) are usually the same in most circumstances. Some policies, on the other hand, allow the assured to select the number of premium-paying years.
7. Switch Charges
To meet your changing requirements and ambitions, you can swap between the funds accessible. A set number of such swaps are offered for free each policy year. Following that, each switch would attract a specific charge. These fees are deducted proportionately from each of the funds you selected.
8. Switching Between Funds
When there are economic uncertainty or interest rate variations, you may want to rotate between equity and debt funds. Changes in your financial situation, liabilities, or risk profile may necessitate adjusting your investments at times.
9. Making Withdrawals
After a specific period of time, you can make partial withdrawals from your funds, however, there will be a partial withdrawal fee. The withdrawal amount must be at least the minimum prescribed withdrawal amount, and the fund value after the withdrawal must not fall below the minimum fund value.
Before the policy's maturity date, you can make a complete withdrawal. Surrender fees, on the other hand, will apply in this situation.
You have total financial control with a ULIP. At any time, you have the option to change your funds. This means you can transfer funds from equities funds to balanced and debt funds and vice versa. You also have the option of redirecting future premiums to a different fund. You can top-up your ULIP if you want to put more money into it later. Most crucially, you may be able to take a portion of your investment funds for financial crises in certain circumstances.
Also read- How To Select Best ULIP According To Your Risk Portfolio?
A Detailed Comparison Between ULIPs And SIPs
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.