Unique Features Of ULIP That You Must Know
Published On Sep 03, 2021 5:00 PM By InsuranceDekho
Table of Contents
- Unique Features Of Unit-Linked Insurance Plans (ULIPs)
A Unit Linked Insurance Plan (ULIP) is a one-of-a-kind financial vehicle that also provides life insurance cover. ULIPs enable you to build money for long-term goals such as your dream house, your child's education, your retirement, and more through systematic investments and market-linked returns. At the same time, a life insurance policy ensures that your objectives are met even if an unanticipated incident occurs.
ULIPs allow you to invest in a variety of stock and debt funds based on your risk tolerance. While the premiums you pay are tax-deductible under Section 80C, the returns you file are likewise tax-free under Section 10(10D) of the Income Tax Act of 1961.
Unique Features Of Unit-Linked Insurance Plans (ULIPs)
Let's look into some of the Unique features of ULIP:
ULIPs Are Designed To Be Held For A Lengthy Period Of Time
The true value of ULIPs is realized after investing for a long time, say 15-20 years. Market fluctuations and charges will be compensated, and a larger amount of the premium will be diverted into investment avenues that will allow you to reap maximum rewards if you stay engaged for a longer period of time.
The Ability To Invest According To Your Risk Tolerance
With ULIPs, you have the freedom to select funds based on your risk tolerance. Most ULIPs offer a variety of equity, debt, and balanced funds to pick from, as well as the ability to swap funds when your financial circumstances change.
Pay A Single Premium And Get All The Benefits Of A ULIP
Unlike a typical premium ULIP, where premiums must be paid at predetermined periods, a Single Premium ULIP requires only one payment at the time of purchase. Once you've paid the premium, you'll have access to the policy's benefits throughout the duration of the term. The policy is never going to expire. Exide Life Wealth Builder is a Single Premium ULIP with eight fund selections and three investment methods to help you build your money. A Single Premium ULIP may be a great alternative if you are searching for a lump sum investment with long-term wealth creation over 5 or 10 years.
EEE Products Are ULIPs
Because they are EEE (Exempt-Exempt-Exempt), ULIPs are considered one of the top tax-saving devices. This means you can deduct taxes both when you invest and when you earn money, as well as when you withdraw your money. According to current income tax legislation, the premiums paid for ULIPs can be deducted from taxable income.
Life Insurance Benefits And Market-linked Returns
ULIPs not only give financial stability to your family for the duration of the policy, but they also allow you to earn market-linked returns over time. A percentage of the total premium is invested in the stock market, while the rest is utilized to fund life insurance.
With a better understanding of how ULIPs work, you can make a more informed decision about whether or not to invest in them. It is advantageous to invest for a longer period of time. In the long run, the effect of market volatility is compensated. With time, higher percentages of your premiums are invested, allowing you to fulfill all of your long-term objectives.
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Difference between ULIPs and Life Insurance
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.