Unit Linked Insurance Plan (better known as ULIP) is a life insurance product which in addition to providing risk cover to the insurance seekers, also gives investment options. It is a market linked product which gives flexibility in investing in qualified capital market investments like equity or debt funds as per the investor’s convenience. In ULIP, it is very easy to monitor your investments made.
Due to several changes made by the insurance regular (IRDAI) in recent past, ULIPs have become cheaper than the mutual fund investments.
In addition to this, ULIPs prove to be the best when it comes to investing for your long term goals like child’s education, retirement, etc. This is because ULIPs have a five year lock-in period. Benefits such as transparent structure and payment process, flexibility in switching between funds based on your risk appetite, numerous fund options right from debt, balanced and equity for both: risk takers and non-risk takers. And most important of all it provides protection (life cover) to all the policyholders.
Learn more about different types of life cover here.
Are ULIPs better than mutual fund investments?
Mutual funds and ULIPs are both market linked products which give you capital appreciation. In both the
instruments your money is invested in the market i.e. shares, bonds, debt instruments etc. It is easy to invest money through either of them. Traditionally ULIPs were not very popular among investors but the new age plan has changed the face of ULIPs. It has the best performing fund options, no allocation charges, you can invest easily just like SIP and the best part is that the company will allocate some percentage in your funds too. So the company also invests with you.
What’s more? This additional allocation will increase along with your investment for the first 5 years 1%, 6th 10th year it will be 3%, 11th -15th year it will be 5% and 15th -20th year it will be 7%.
The most important feature for selecting this new age ULIP over mutual funds is that along with the additional allocations and other amazing benefits it also has a three layered tax benefit structure available, i.e. investment, dividend and maturity amount are all exempt from tax.
In ULIPs the investment is tax-deductible under the section 80(C) of Income Tax Act. So you can reap the benefits for the entire premium amount you pay. Later, when the final maturity amount is received, it is exempted under section 10(10 D) of Income Tax Act. In fact, any income incurred through ULIP is tax free for the policyholder and the nominee.
Do you really need to be making tax saving investments?
ULIP is a perfect solution for your long term financial goals as it gives you great returns, protection and tax benefit throughout the policy term. Why wait? Calculate your returns and see it yourself: https://www.edelweisstokio.in/wealth-plus-online/buy