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Why Are Unit Linked Insurance Plans Popular?

Published On Nov 05, 2021 10:00 AM By Shrida Gulati

ULIPs are very unique life insurance plans. As the name suggests ULIPs provide life insurance and an opportunity to build a corpus for the future. Part of the premium paid towards unit linked insurance plans are invested in chosen market linked investment options and the remainder shall be provided as a death benefit in case of an untimely demise of the life assured during the policy tenure. The returns under this plan purely depend on the performance of the market linked investment option chosen by the life assured.

Why Are Unit Linked Insurance Plans Popular?

ULIPs offer dual benefits, apart from that there are certain reasons why ULIPs are popular amongst investors:

1. Flexible

Under a unit linked insurance policy the life assured has the flexibility to choose the market linked fund option as per your risk tolerance. You also get the option to switch funds to achieve maximum funds. Under unit linked insurance policy you have the flexibility to increase the sum assured and opt for riders at the time of policy issuance or renewal.  

2. Allows Goal Based Savings

In order to fulfil your life goals such as purchasing a home, funding a child's financial requirements or creating a corpus for future you need to save your earnings. ULIPs allow long-term investment. With help of ULIPs can systematically create a corpus to fulfil your future financial goals. 

3. Financial Security

Unit linked insurance plans are a type of life insurance plan. These plans provide life cover and investment opportunities. In case of your untimely demise during the policy tenure a death benefit shall be provided to the nominee. ULIPs help you ensure financial security of your family in case of your untimely demise. 

4. Tax Benefits

Under this insurance policy you can avail tax benefits. The payouts and premiums under a unit linked insurance policy qualify for tax exemptions under Section 80c and 10(10D) of the Income Tax Act. 

ULIPs do involve a bit of risk as part of the premiums are invested into different market linked fund options and the returns depend on the performance of the market linked fund options. ULIPs can help you ensure financial security of your family in case of your unforeseen demise during the policy tenure. It is advised that a person who has high risk tolerance must consider ULIPs due to the nature of returns which are purely based on the performance of the fund option chosen by the policyholder. ULIPs are a good choice of investment. 

Also read - Understanding The Difference Between ULIP And Term Insurance

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