• Are you contemplating insurance but do not wish for your money to remain inactive after making substantial payments? We understand, particularly as the cost of living rises every few days while wages decrease. This situation creates a necessity for a financial instrument that delivers good value for your expenditure.

• In such circumstances, a viable option is to choose ULIP, a Unit-Linked Insurance Plan that merges insurance and investment elements to provide you with market-linked returns. Nevertheless, ULIPs can differ based on the insurance company that is providing it.
• To enhance your comprehension of ULIPs and their features, here’s a summary of 5 essential attributes and advantages one should consider when investing in a ULIP plan.

What is ULIP?

ULIP, or Unit Linked Insurance Plan, is a financial offering that integrates life insurance with investment options, permitting policyholders to invest in various funds while providing life coverage.

For an in-depth understanding of ULIPS

5 Essential Features and Benefits of ULIP

• ULIP is an excellent option for those seeking to enhance their wealth over time. It not only provides financial flexibility but also includes several advantageous features such as:

1. Market Linked Returns

Market-linked returns are an important feature of Unit-Linked Insurance Plans (ULIPs). This enables you to build long-term wealth by delivering strong returns on your investments. Furthermore, Unit-Linked Insurance Plans or ULIPs allow you to choose from a diverse selection of market-linked funds, including equities, bonds, debt, and various hybrid options.

When you invest in these funds, you automatically qualify to receive market returns depending on market performance.

2. Tax Saving

Unit-Linked Insurance Plans (ULIPs) give tax advantages based on your income level. When you invest in a ULIP, you can decrease your taxable income (up to Rs. 1. 5 Lakhs) under Section 80C of the Income Tax Act.

The positive aspect is that as your ULIP investment grows, the returns you get from it, whether as a maturity sum or a death benefit, are tax-exempt up to a specific limit under Section 10(10D)1 according to existing tax regulations, provided the sum assured is at least 10 times the annual premium paid. In summary, ULIPs assist you in saving on taxes during your investment and allow you to retain all your earnings without tax deductions when you withdraw the funds. It’s a wise choice for your financial health and peace of mind.

3. Insurance Component

Insurance is an integral element of ULIPs. This insurance feature guarantees that your family is financially supported if something unfortunate occurs during the policy duration. The amount received by the family in the event of the life assured’s death acts as a financial safeguard to fulfill their requirements, debts, and secure their future.

4. Investment Component

When you contribute to a ULIP, a portion of your funds is allocated to various investment funds. These investments can facilitate your money’s growth, although the extent of growth is contingent upon the performance of these funds over time.

Before committing to a ULIP, it’s crucial to consider several factors. Reflect on the risks involved, the fees you will incur, and the possible returns you might achieve.

5. Partial Withdrawal

Partial withdrawal is a significant advantage of ULIPs. It permits you to access a portion of your investment to address urgent financial requirements before the policy matures without terminating the entire policy.

A lock-in duration (generally five years) is in place, along with a minimum amount that must be retained in the policy following a withdrawal. The insurance provider sets the upper limit for the amount or percentage that can be withdrawn from the fund value.

Conclusion

• In conclusion, ULIPs represent a potent financial tool that can assist you in increasing your wealth over time, reducing tax liabilities, securing your family’s financial security, and providing flexibility as required. To fully benefit from your ULIP, it is essential to evaluate these important features, ensure they align with your financial objectives, and obtain professional advice when needed.

• Keep in mind that regularly assessing your policy, pursuing expert guidance, and remaining knowledgeable will ensure that your selected ULIP fulfills your specific requirements.