Top Reasons To Stay Invested In ULIPs

Unit-linked Insurance plans are investment vehicles that provide a high rate of return while also providing coverage for the duration of the policy. As a result, with just one insurance policy, you can achieve both wealth creation and life insurance. ULIPs are best used as long-term investment options because they have a five-year lock-in period.

Furthermore, ULIPs are EEE investments, meaning that the deposit, accrual, and withdrawal can all be deducted from your taxes under Section 80C. A portion of the ULIP premium is invested in equity/debt-based instruments, while the remainder is used to offer insurance coverage.

Top Reasons To Stay Invested In ULIPs

Below are the top reasons to stay invested in ULIPs:

• Wealth-Creation Investment

ULIPs are suitable for long-term wealth accumulation in order to achieve life goals such as acquiring a car or a property. Because these instruments take advantage of compounding, you're likely to get a bigger return than you put in after the five-year lock-in period. To achieve big gains from ULIPs, it's best to invest for longer than the five-year lock-in term.

• Flexibility

ULIPs are mutual funds that invest in equity, debt, and balanced funds. It allows the investor to alter the amount invested between them based on their investment objectives and risk tolerance. For example, if the investor's goal is to build money, he or she can choose equities funds. Debt funds, on the other hand, are a good choice for investors who want consistent returns over time. Reputable insurance firms allow investors to alter their policies for free many times per year.

• Tax Benefits

Section 80C allows investors to deduct their ULIP investments. As a result, you might save up to Rs. 1.5 lakh on premiums. Section 10(10D) of the Internal Revenue Code makes the death and maturity benefits tax-free. Individuals seeking pension and retirement benefits are best served by ULIPs in general. You are entitled to full life protection when you buy a ULIP pension plan.

ULIPs are a great option for investors who want to build money while also protecting their families future. Investing over longer periods of time will assist the investor in achieving their long-term objectives. In addition to mandated investment returns, some of the greatest ULIPs available today include features like partial withdrawals, free fund switching, and tax-free maturity distributions.

• Partial Withdrawal

The best thing about ULIPs is that they allow partial withdrawal once the initial lock-in period has passed. Partially withdrawing funds is generally subject to specific criteria imposed by assurers. As a result, depending on your financial needs, you can withdraw a certain amount from the corpus at any moment.

• Investment

Another significant benefit of ULIPs is that they allow you to invest in both stock and debt assets to earn returns. When it comes to long-term goals, ULIPs may be a better choice. Depending on your needs, risk appetite, and investment horizon, you can choose from debt, equity, or a mix of the three. Policyholders can choose from a variety of fund options, including equities, bond, and hybrid funds, with ULIPs. 

Conclusion

When it comes to financial goals, we normally want to put our money where it will yield the best results. In this regard, investors favour Unit Linked Insurance Plans (ULIPs) because of the numerous benefits they offer. A term plan, on the one hand, provides life insurance. This plan provides a lump-sum payment to the beneficiary if the policyholder passes away during the policy period. This strategy, however, has no financial backing. ULIPs, on the other hand, allow you to invest as well as gain insurance coverage. A ULIP is a form of insurance policy that offers a twofold benefit. In this case, insurance companies provide investors the possibility to invest in addition to providing insurance.

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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.