6 things to keep in mind to get the best out of your ULIPs

ULIPs give you an option to invest in equity, debt or a mix of both.  Equity funds give you a long-term high growth potential, whereas, debt funds preserve your wealth. Based on your risk appetite and goals, you can choose to invest in either equity or debt. In addition to these, ULIPs also offer balanced funds, which give you an option to enjoy the best of both worlds – equity and debt. With ULIPs, you can also move your money between these funds as per your needs.

ULIPs are designed to help you meet your financial goals like funding your child’s education or planning for your retirement. In addition to securing your goals, ULIPs also secure your family. They provide a lump sum amount called the Life Cover so that your loved ones can achieve their dreams even in your absence. You can opt for a minimum Life Cover of 10 times your annual premium. To increase security of your family, you can also increase the Life Cover offered under your policy.

Let us understand this with an example. For an annual premium of `1,00,000 you can get a minimum Life Cover of `10,00,000. As your children grow older, your financial liabilities increase. As a result, you can increase the level of protection of your family by increasing your Life Cover.

Besides providing Life Cover, ULIPs help you create wealth to achieve your financial goals. For staying invested for a long term in your ULIPs, your insurance company will offer you bonuses in the form of Loyalty Additions and Wealth Boosters to grow your wealth further.

Under the Income Tax Act, 1961, you can save taxes on your hard earned money with Unit Linked Insurance plans. 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 the Sections 80C, 80CCC and 80D

Stage 2: Earnings Advantage

The growth of your money is not taxable*

Stage 3: Exclusive Switching Advantage

You can make completely tax-free* debt-equity Switches**

Stage 4 Exit Advantage

You also receive a tax free* Maturity Benefit#

 

*Tax benefits are subject to conditions u/s 80C, 80CCC, 80D, 10(10A) and 10(10D) of the Income Tax Act, 1961. Tax laws are subject to amendments from time to time.
**Switch is an option to move your allocated money between equity and debt funds
#Maturity Benefit is the amount you receive when your policy ends


ULIPs help you meet two of your most important financial needs - Protection and Savings. Both these benefits have some charges attached to them and it is important to understand the following charges before purchasing the ULIP:

Premium Allocation charge

Policy Administration charge

Mortality charge

Fund Management charge

In ULIPs, the overall charges reduce in the long term resulting in wealth creation.

Please note that your life insurer reserves the right to revise the fees and charges over a period of time.

Click here to know more about the charge structure of ULIPs.

ULIPs offer you the benefit of a Life Cover and also give you the opportunity to grow your wealth. To get the best out of your ULIPs, understand the following benefits available in ULIPs:

1. Fund Switch – An option to move your money between equity and debt funds.

2. Premium Redirection – An option to invest your future premiums in a different fund of your choice other than your base fund.

3. Partial Withdrawals – An option that allows you to withdraw a part of your money.

4. Top-ups – An option that allows you to invest your surplus money, either once or multiple times in your existing policy.

5. Riders – An option to increase your protection by getting additional cover. An example of a rider is Unit Linked Accident Benefit Rider. It allows you to increase the Life Cover amount that your family receives in case of an accidental death.

To understand all benefits offered under your policy, it is advisable that you read the product brochure carefully. This will help you make the right decision.


+Provided monies are not in DP Fund. You can make unlimited number of partial withdrawals as long as the total amount of partial withdrawals in a year does not exceed 20% of the Fund Value in a policy year. DP Funds refer to Discontinued Policy Funds and consist of money from lapsed policy.

Unlike traditional products, Unit Linked insurance products are subject to market risk, which affect the Net Asset Values. The customer shall be responsible for his/her decision. The names of the Company, Product names or fund options do not indicate their quality or future guidance on returns. Funds do not offer guaranteed or assured returns.
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