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How Can A ULIP Policy Help You Plan for Your Retirement?

  8/4/23 10:08 AM

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Retirement planning is one of the essential components of financial planning. Retirement is a time when you no longer have a job to support you financially. Hence, it becomes crucial to save enough for your golden years well in advance so that you do not have to live a compromised lifestyle later.

When it comes to saving for retirement, ULIP plan can be a great option. A basic concept of ULIP makes it a safe investment tool that can provide you with high returns. ULIP funds also cater to different risk appetites and can fit into any investor’s needs. In fact, the best ULIPs let you switch funds multiple times during the policy term, without any ULIP charges, to gain the most from your invested capital.

If you are doubtful about picking a unit-linked plan for retirement, here are some things you need to know.

What are ULIP Plans?

A ULIP is an insurance investment plan that offers you dual benefits of life insurance and investment. On the one hand, you get to secure your loved ones with a life cover that is paid in the unfortunate event of death. On the other hand, the maturity benefits let you save for different goals and get high returns that can beat inflation. There are many useful features of ULIPs, such as tax benefits, high growth on your money, the safety of capital, and more.

Are ULIPs a reliable investment option for retirement?

A ULIP plan can be a beneficial retirement tool for several reasons, such as:

1. ULIPs are long-term investment: A ULIP scheme is primarily a long-term investment instrument that offers the best returns over a long policy term. ULIPs work on the power of compounding and generate significant rewards over the course of time. Considering the fact that retirement saving is a long-term goal, you can effectively use a ULIP plan to gain high rewards that can be used to cover your retirement expenses.

2. ULIPs let you switch funds: The best ULIPsoffer you the option to switch from one fund to another several times during the policy term. For example, you can switch between equity, debt, and balanced funds as per your preference multiple times in a year. This ensures that you get an opportunity to make the most of the changes in the market and use them to your advantage. When the market is low, you can move to more equities, and if the market rises, you can add more debt funds. Making conscious fund switches as per the prevailing market situations lets you enhance your returns and build a large retirement corpus.

3. ULIPs offer a life cover: Retirement is synonymous with old age. And old age can bring its share of health-related issues. Therefore, it becomes crucial to safeguard the financial interests of your family. In your absence, the death benefit from a ULIP insuranceplan can offer your loved ones the necessary funds to carry on with their life. The money from such plans can be used to cover various costs, such as the education or wedding expenses of a child, travel or health expenses of a spouse, and much more.

4. ULIPs fit into every life stage: With a wide range of options to choose from, ULIP fundsare extremely flexible and can be suitable for all ages. You can pick a policy term as per your goal. You can also make use of the top-up feature and increase your premiums as and when you like, and ultimately increase your overall earnings at the time of retirement. ULIPs also allow you to take partial withdrawals after the five-year lock-in period is over. This option can be helpful in case of a financial emergency.

How to invest in ULIPs for retirement planning?

If you wish to invest in a ULIP for retirement planning, keep the following factors in mind:

o  Start early: Remember that the sooner you start investing, the more time you have to build up your retirement corpus. A longer investment term lets you take advantage of the power of compounding.

o  Pick the right fund options: Select suitable fund options as per your risk appetite and life stage. Equities can offer higher rewards but can also increase risk. On the other hand, debt and balanced funds can offer low to moderate returns with lower risk.

o  Increase your premiums: Use the top-up facility to increase your investment. Make use of every bonus or salary hike to invest in your ULIP. This will ensure maximum returns at the end of the term.

o  Stay invested for the long term: Good ULIP plans offer the best returns if you stay invested for the long term. Try to avoid partial withdrawals and let your money grow without any disruptions.

Wealth Secure Plus by Edelweiss Tokio Life Insurance

Edelweiss Tokio ULIP plans make for an excellent choice for retirement planning.

The Edelweiss Tokio Life Wealth Secure Plus Plan offers the following features:

o  An extended life cover: The plan provides you with a life cover that extends up to the age of 100.

o  Affordable premiums: The plan can be bought at affordable premiums that offer great returns over time.

o  Loyalty additions, booster additions, and maturity additions: The plan adds loyalty, booster additions, and maturity additions as rewards for staying invested.

o  Partial withdrawals: You can make partial withdrawals at the end of the five-year lock-in period.

o  Fund options: You can choose from seven different fund options as per your needs.

o  Tax benefits: The premiums paid and benefits earned qualify for tax benefits under Section 80C and Section 10 (10D) of the Income Tax Act of 1961 as per prevailing tax norms.

To sum it up

ULIP fundsare a viable retirement tool that can be used by all types of investors. A ULIP can offer you the desired results, irrespective of your age, risk tolerance, or retirement goals. However, it is important to pick a plan from a trustworthy insurance provider like Edelweiss Tokio Life Insurance. This will ensure that your invested capital is safe and your loved ones get the necessary financial help in their hour of need. 


Swati Tumar - Travel & Finance Writer

Swati is a Writer in the day and an illustrator at night. Among her interests, she is quite fond of art and all things creative. She often indulges herself in creating doodles, illustrations, and other forms of content. She identifies herself as an avid traveler and shameless foodie.

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