Financial planning is essential for every individual. With a plethora of financial products being marketed, it is imperative to select the right product. If you are keen to make an investment and plan on buying an insurance policy, a Unit Linked Insurance Plan (ULIP) is the best option.
ULIP plans guarantee flexibility to investors which conventional insurance plans lack. Furthermore, the potential to create inflation-adjusted returns is another great feature of ULIP plans. Before deciding on purchasing ULIPs, let’s glance over some of its benefits.
ULIPs provide twin advantages in a single answer: Insurance plus Investment
You can not only guarantee financial protection but also incrementally plan your financial future. This is done through investing in funds of your selection through ULIPs.
Offers a broad spectrum of investment choices
You can select the funds based on your risk proclivity. For instance; low-risk takers can invest in debt funds. Moderate risk-taking is associated with balanced funds investment. High-risk takers can opt for equity fund investment.
Switch Facility: Give elasticity for a Portfolio Switch
ULIP plans provide flexibility to make a switch between multiple funds. An example would be the transition between Equity to debt and the other way round. This option provides you to alter the invested amount ratio without making a dent to your pocket.
Presence of Top-up facility
When the ULIP plans are in the higher performance category, you can opt to make a top-up premium payment into your ULIP. This has the benefit of adding extra cash into your account and increase the value of the plan. This is considered a comfortable and cost-efficient when compared to buying new ULIP plan.
An Outstanding Long-term investment option
If your ultimate objective is long-term wealth creation, then a ULIP plan is ideal since the ULIP returns are connected to the stock market. You can steer clear of short term market fluctuations and other ancillary risks, and gain higher returns. To meet the goals of Children’s college education and make a house down payment, ULIP is the best choice.
Flexibility to select certain riders
A rider is an extra protection that allows for an additional cover to your existing cover. This gives multifaceted financial protection that can act as a motivational factor to improve your professional career.
ULIP plans carry Tax Benefits
Handsome tax benefits can be availed by taking ULIP plans; Tax benefits are bestowed under Section 80 C up to Rs 1,50,000 of the total premium paid. Added to this, all pay-outs on maturity are exempt from any levy of tax under Section 10D of the IT Act. The effect of long term capital gains taxation on ULIP plans is negligible, thus improving tax efficiency.
Bottom Line
The multitude of ULIP benefits makes it a desirable investment option for fulfilling long term financial goals. If you want to go for market-linked wealth expansion plan and get the benefits of a death rate benefit amount, ULIP is an exceptional option to explore.
