What are ULIPs?

5 Benefits of Investing in ULIPs

• Freedom to choose your Life Cover²:

  In Unit Linked Insurance Policies, you can choose the amount of Life Cover² that you want. In most ULIPs, the minimum Life Cover² offered is 10 times your annual premium amount. However, depending on the policy and the insurance company, you can select your Life Cover² amount as much as 40 times of your annual premium or even higher.

• Freedom to choose your investment type:

  There are two basic types of funds – Equity Funds, Debt Funds and a mix of both called Balanced Funds. Equity Funds include investments such as buying shares of companies. Debt Funds invest in debt instruments. Balanced Funds are those funds that invest equal proportions in both equity and debt funds.
  ULIPs allow you to invest in different funds based on your investment goals and risk appetite. For example, if you wish to grow your wealth and don’t mind taking a risk on your investment, you can invest in equity funds. Similarly, if you wish to get steady returns on your investment, you can invest in debt funds.
  You can also move your money between equity and debt funds by using an option called 'switch'. Most insurance policies offer a fixed number of free switches in a year, and for additional switches, a small fee is charged.

• Liquidity:

  With Unit Linked Insurance Policies, you also get an option called partial withdrawal⁺, which allows you to withdraw a part of the money invested in your policy. This option helps you to take care of immediate expenses such as your child’s 10th, 12th or graduation fees, going on a family vacation, in case of emergencies, and more. Partial withdrawals are usually free of cost.

• Goal-based planning:

  ULIPs are structured to help you secure your key goals such as the potential for wealth creation, retirement planning or saving for your child’s education. ULIPs also give you the added benefit of knowing that your premium is working towards securing your future goals.

• Tax benefits:

  Under the Income Tax Act, 1961, you can save tax on your hard-earned money by investing in a ULIP. You can get tax advantage at different stages of your Life Insurance Policy.
  Stage 1: Entry Advantage – You receive tax benefits^{^} on your premium payments, under Section 80C
  Stage 2: Exclusive Switching Advantage – You can make completely tax-free^{^} debt-equity switches
  Stage 3: Exit Advantage – You also receive a tax-free^{^} Maturity Benefit^# subject to conditions of Section 10(10D)

People like you also read ...