ULIP investments

Why are ULIP Investments Important?

Ever wonder what a ULIP plan is? ULIP is a plan which has the best aspects of two things – protection and saving in a single plan. A major advantage that ULIP investment policies have over conventional policies is that it also has a life cover. Hence, your money keeps growing while your loved one’s future is secured. A ULIP investment plan is both an insurance policy and an investment.

Four reasons you should invest in ULIP investment plans

1. Flexibility

  • You can choose your fund option

ULIPs provide you with a range of equity, debt and balanced fund options to choose from. Therefore, you can invest money according to your financial needs and how much risk you want to take. You can even move your money between different funds that can help you get maximum return on investments.

  • You can change your life cover

ULIP investment policies allow you to choose your Sum Assured at the beginning of your policy. In addition, some ULIPs even let you increase the Sum assured when you need them at different stages of life.

  • You can change your premium amount

ULIPs let you pay a top-up amount which is over and above your current premium amount. You can use this attribute to maximise your return on investments.

2. Transparency

  • Benefit illustration

As a policyholder, it is your right to know the sales benefit illustration. It lets you understand the usage and charges deducted during the policy term.

  • Net Asset Value(NAV)

It is crucial that you monitor the performance of your investment on a regular basis. This can be done by the NAV updates published by the company. NAV is the price at which units of the investment are purchased. The fluctuations in NAV will help you track the performance of your funds.

  • Free-look period

All insurance plans, including ULIPs, come with a free-look period. This is a 15-day window in which you can return the policy if you are not happy with it.

  • Tax benefits

You get tax benefits on your premium under Section 80C and Section 80D. Also, the growth of your money is not taxable. You also get a tax free Maturity Benefit under Section 10 (10D). 

  • Goal-based savings

Generally, investments are made to fulfil huge goals like buying a house, higher education of children and for a secure retirement. Long term investment plans like ULIPs are the most pragmatic ways to do so. ULIPs let you invest money in a disciplined manner.

ULIP policy is an efficient and practical way to ensure that your money is growing as well as safe. One of the best ULIP benefits is that it has the potential to obtain better returns than any other investment policy. They are a great asset for those who are young and want the best out of the equity advantage. To come to a concrete decision, you need to be aware of the product you are investing in. Before you opt for a ULIP investment, make sure you consider the key elements and get the best out of the policy.