Unit Linked Pension Plans - A Smart Choice For Your Retirement

Updated On Jul 05, 2021

ULIPs also known as Unit-Linked Insurance Plans are a prominent specialised financial insurance product. It is a dual character plan of protection and investment and aims to safeguard your future in terms of finances while you are still working, saving, and spending. ULIPs encourage smart investment practices since they allow you to invest at your own pace. This results in less stress and greater flexibility.

The charges you pay are reinvested in the funds you choose after allocation charges and expenses such as those for policy management, policy administration, and administering life insurance are removed from the funds by eliminating some components in a Unit Linked Insurance Plan or ULIPs. Apart from your regular life cover, Unit Linked Insurance Plans specialize in financially securing and stabilizing your post retirement future.

A Smart Choice For Your Retirement- Unit Linked Pension Plan

One of the most transformative times in one's life is retirement. Whatever your life has been like, once you reach your retirement goal, you'll need a consistent income from the pool you've accumulated. There should be no battle for income after retirement. ULIPs can be a good choice. Here's why:

Boosts Your Corpus With Time

With ULIPs, the more you invest, the greater your wealth grows. Bonus units are available in ULIP plans for investors who contribute for more than five years. The units are automatically added to your current portfolio at no cost to you. It also rewards investors who stay for more than ten years with a greater bonus. The sole stipulation is that you invest your premiums on time and on a regular basis. Using automatic debit from your bank account, you may easily resolve this problem.

Maturity Value Exempted From Taxes

When it comes to building tax-free wealth, ULIPs are incredible. You can invest as much as you wish and establish a multi-crore corpus without paying any taxes. All you have to do is make sure your annual investment in the plan does not exceed 10% of the current policy term life sum assured. If you invest more than this amount in a ULIP investment portfolio in a given financial year, the excess amount will be taxable at fruition. This amount can be significant if you invest for more than 15 years, which is quite likely for a retirement objective. It's also likely that you'll wish to add to the plan's excess occasionally.

Life Cover Security For Your Spouse

If you're married to a homemaker, his or her financial objectives and requirements are intertwined with yours. Her retirement and financial aspirations will be severely harmed in the event of your unexpected death. ULIP, on the other hand, ensures that this does not happen. If you meet your end, the insurer will make certain that your ULIP achieves the objective you set for it. After paying the life insurance sum assured upon your death, the insurer will invest all future payments on your behalf. The money will continue to grow and will be given out to your spouse when they reach maturity.

An Investment Option With Customizable Asset Allocation Facility

ULIPs allow you to invest in many funds at the same time. These funds could be a mix of equity and debt or either. Switching your investment strategy or transferring money from one sort of investment to another has no effect on the investment's tax position. You can also adjust your asset allocation at any time and even withdraw money in part after the lock-in period is over. If you wish to manage your allocation yourself, the ULIP gives you complete control.

Take Away

The fact that ULIPs are dual in nature and provide you with both investment and protection that too when you’re currently working, makes it a popular and reliable investment option for working individuals. By investing into an ULIP you can safeguard your retirement to quite a great extent.