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Reasons To Purchase A ULIP

Published On Mar 18, 2021 12:00 AM By InsuranceDekho

Unit-Linked Insurance Plans (ULIPs) are a popular form of investment and insurance cover. It is precisely this dual nature that creates such a lot of buzz around this type of plan. ULIPs offer a great way for you to secure a great financial future while you are currently earning.

ULIPs make for good investment habits as you can invest in them at regular intervals of your choice. This also adds less pressure and incredible flexibility. To find more such reasons to purchase a ULIP, read on.

You May Also Like to Read:- Is Investing in a ULIP a Good Decision?

Key Reasons To Purchase A ULIP

Following are the key reasons why everyone should purchase a Unit-Linked Insurance Plan (ULIP) -

1. To Get Market-Linked Returns 

 ULIPs are your go-to if you are looking for great returns on your earnings. They allow regular investments of the smallest amounts. Your investments are compounded annually which facilitate great returns. Plus, this also depends on the type of investment you choose.

2. For Substantial Life Cover

Besides investing, you also get life cover from ULIPs. While investing for your future, a ULIP also ensures you are ready to face the uncertainties of life that might come your way, in the present. ULIPs also have a death benefits payout which is a great way to help your family stay financially secure should anything happen to you.

3. To Save Tax

 Like with all insurance plans, ULIPs are subjected to tax exemptions under Section 80C of the Income Tax Act. This is applied to the premium that you pay for the insurance component of ULIPs. Other tax benefits include exemptions on the maturity amount. There are also no taxes imposed if and when you decide to change your investment fund.

4. To Maintain Liquidity

ULIPs are equipped with a partial withdrawal benefit. This essentially means that you can withdraw a certain amount from your existing investment fund. Partial withdrawals are generally allowed after completion of at least 2 plan years. This helps you to meet unplanned financial requirements without having to resort to liquidating your investments or other assets. 

5. To Get Loan Assistance

When you have an existing ULIP, getting a loan becomes easier. A loan against an insurance plan has several benefits including lower interest rates, less documentation and more. There are also chances of your loan getting approved faster than usual. This is extremely helpful when you are undertaking important ventures in your life and need robust financial support. 

Also Read:- The Unique Features of ULIPs

Do ULIPs Really Provide Good Returns?


The act of investing or buying an insurance plan is very personal and depends on a variety of personal needs and circumstances. Nevertheless, as evident from above, there are several good reasons to purchase a ULIP.

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