It is crucial that women secure financial independence and simultaneously focus on wealth creation from early on in their careers. A ULIP plan (Unit Linked Insurance Plan) is among the best investment tool to help women in this endeavour. As women have numerous responsibilities to address on several fronts, investments in policies such as whole life ULIP plans can help relieve some of their financial worries. While ULIP taxation, as proposed in the Finance Bill 2021, has been a matter of concern, the benefits that come from a ULIP policy far outweigh the worries of the taxation changes. What is important to remember is that with certain conditions, it is possible to gain ULIP returns tax-free.
To help you find the best ULIP, it is important to understand the concept of ULIP and how it can help you achieve your long-term financial goals.
What is a ULIP Plan?
In its simplest, a ULIP policy is insurance as well as an investment tool. They provide an individual with the freedom to explore the capital market for investments and, at the same time, offer the necessary life coverage. ULIP policy can be customised based on individual financial requirements and risk appetites. ULIPs have now become a popular investment choice as they provide the dual benefit of life cover along with wealth maximisation.
When you opt for a ULIP investment, a portion of your premium is used for providing life cover, and the balance amount is invested in the fund of your choice. The funds are based on varying risk levels: equity, debt, or hybrid funds. The insurance company allocates ‘Units’ to each investor based on the proportion of the money invested. This amount is called the Net Asset Value (NAV), and subject to market performance, this unit NAV increases or decreases. These funds are managed by the insurance company’s fund managers, for which ULIP fund management charges are levied on you. On maturity of the ULIP insurance, the insurance company pays the policyholder the fund value depending on the market value.
Several online ULIP plans in India offer competitive pricing to encourage investments in them. Additionally, gaining ULIP returns tax-free is another important feature that lures seasoned as well as novice buyers. If you are looking for the best ULIP to buy, you can make use of a ULIP calculator to compare plans, know the premium amount, and calculate returns.
Why Should Women Invest in ULIPs?
Women are more financially independent now than ever before. However, when it comes to getting insured or buying a comprehensive investment plan for themselves, they are either over-cautious or relegate it as low-priority. A part of this could be attributed to a lack of adequate financial literacy.
For many women, opting for both a life insurance plan and considerable investments can be too time-consuming a prospect and financially exhaustive. In such a scenario, ULIPs can be especially pertinent and astute. ULIP taxation benefits under Section 80C and Section 10(10D) of the Income Tax Act, which proposed that income invested, interest earned, and the maturity amount are exempt from taxes, make ULIPs more attractive for those looking for affordable investment choices.
Here is why women must invest in ULIPs sooner rather than later:
- Encourages Savings: ULIPs are among the best investment tools that promote the habit of saving. As financial planning for women will differ from that of a man owing to the difference in salaries earned, more breaks from work due to marriage or pregnancy, and financial challenges faced when widowed or divorced, it is all the more important for women to save. If you are a single woman, it is important to save at least 20% of what you earn and start creating an emergency fund. This is where a ULIP investment can be of great use. By investing in a ULIP policy that comes with a lock-in period, you are ensuring that a certain portion of your income goes towards keeping the fund active, thereby saving for your long-term goals.
- Builds Long-Term Corpus: Investing in a ULIP policy is ideal for building a substantial corpus in the long run. This can be perfect for emergency scenarios where you require a large amount of money. Women generally have a longer life span than men, and so it is important to align your financial goals appropriately. Investments in financial products such as whole life ULIP plans wherein the policy stays active for the duration of the policyholder’s life are crucial to ensure a secure financial future even in the absence of your partner.
- Helps Attain Long-Term Financial Goals: Every parent wishes to help their child achieve their dreams. A ULIP plan is especially popular for enabling them to achieve long-term financial goals. If a single mother starts her financial planning in advance when her children are young, she can ensure that their dreams of future education can be attained easily.
- Ensures Financial Wellbeing and Security: Insurance plans are popular because they ensure the financial security of your family and loved ones in your absence. If you are a homemaker, ensure that there is appropriate life insurance that has been undertaken on your part. If you are divorced or widowed, ULIPs are among the best and the safest investment plans. You can update your beneficiaries and adequately plan for your retirement.
Wealth Secure+ by Edelweiss Tokio Life Insurance
Edelweiss Tokio Life Insurance ULIP plan – Wealth Secure+ can help you achieve these objectives. The Wealth Secure Plus ULIP insurance ascertains that even in your absence, the aspirations and dreams of your family and children are met. As a part of the premiums paid for a ULIP plan go towards insurance, you can be assured that you leave behind a legacy. You have the option of choosing the premium amount allocated towards a guaranteed cover.
It is important to ensure financial stability as a woman, no matter what phase of life you are in. ULIPs are the first step to ensure financial wellbeing in the future. It is important to be responsible for your finances and make the right investment decisions from early on in life.
Chirag Iyer - BFSI Enthusiast
Chirag is a writer and an avid reader who loves to drink coffee! His other interests include boxing, karate, and singing