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Confused About ULIP? Here's A Simple Guide To Solve All Your Queries

Do you know what is Unit-Linked Insurance Plan? Here's everything you need to know about it. Click to read now!

Sunday May 16, 2021 11:21 AM, ummid.com News Network

ULIP Benefits

For decades, ULIPs (Unit-linked Insurance Plans) have been a famous, safe, and popularly-purchased amalgam of monetary investment plans in India. ULIPs are considered to be the most flexible offerings to be created by the insurance business. Here's an essential guide for you to begin with the most suitable Unit-Linked Insurance Plan as per your life goals.

"What is a ULIP?"

A ULIP or unit linked insurance plan is an extraordinary and creative market-linked creation that consolidates the best of benefits of both investment and life insurance together. In much easier-to-understand terms, ULIP goes about as a single integrated plan for you to appreciate the double benefits of investment in market instruments such as stocks, bonds, and shares (equity, debt, or both) just as secure your future with a life insurance cover. Insurance companies launched ULIPs in 2005, where policyholders who wished to bear high-risk investments could obtain an increased return on their investment.

"How do ULIPs function?"

With unit-linked insurance plans, your premium is essentially divided into two sections. One section of your premium is piped as your insurance cover, while the rest is used as a general pool for investment into market instruments like stocks, bonds, or funds. Investments in funds can either be just equity, debt, or a mixture that is a blend of both. The best part about ULIP is that the premium can be paid on a month-to-month, quarterly, semi-annually, or annually basis, in light of your comfort.

Not at all like endowment plans that offer low returns with low risk, ULIPs can take into investors each kind of risk inclination. Investors who have an average hunger can pick ULIP plans that put resources into generally safe market instruments like Corporate and Government Bonds. At the same time, investors with a high-risk enthusiasm can put resources into ULIP plans that significantly put resources into Stocks and Equity just funds. The lock-in period for a ULIP policy is 5 years. In any case, if you wish to attain the most incredible benefits, it is fitting that you stay invested for a more drawn-out period to average out market vacillations.

Benefits of Unit Linked Insurance Plans

ULIPs are considered beneficial for several reasons; some of them are mentioned below for a better understanding.

Flexible Investment Options

ULIPs offer an entire host of high, medium, and low-risk investment options through diverse funds accessible under a similar plan. You can pick a suitable plan as per your risk-taking desire.

ULIPs provide the flexibility to pick either the amount insured or the premium based on your requirements. They additionally give the flexibility of expanding your investment portfolio through top-ups to benefit as much as possible from investment opportunities because of any adjustment of the outside environment or your own income streams.

Complete Transparency

The charging system, price of an investment, and anticipated rate of returns, for the policy's whole tenure are shared earlier to the moment you purchase a policy. It's consistently a smart thought to comprehend the item you would put your well-deserved cash into.

Likewise, the annual account statement and a quarterly investment portfolio alongside the daily NAV reporting will guarantee that you know about the condition of your investment portfolio consistently.

An Option of Liquidity

If there should be an occurrence of any unexpected future happenings, ULIPs likewise let you make a partial withdrawal, wherein after the initial 5 years, you can pull out funds from your Unit Linked Insurance Plans.

Regulated and Uniform Savings

ULIPs teach the propensity for uniform and regulated savings, which is the way to fruitful long-term financial planning. With regular premium payments, you can appreciate the benefits of wealth formation for your friends and family.

"ULIP Tax Benefits"

Investment in a unit-linked insurance plan is qualified for deduction from taxable income under Section 80C of the Income Tax Act, 1961, up to Rs 1.5 lakh per annum. The maturity profits of the ULIP are likewise exempted from tax under Section 10 (10D) of the Income Tax Act subject to conditions indicated in that. In case that the ULIP investor passes away during the term of the ULIP, he/she will be qualified for the death benefit determined in the ULIP policy, and the sum acquired on death is exempted from tax u/s 10(10D) of The Income Tax Act 1961.

Risk-Free Investment That Grows

With ULIPs, you get the advantage of market-linked development without really taking part in the stock market exchange, also the added convenience of life-cover. Your invested sum develops further as the insurance companies add to your investment funds through additions/bonuses and are accessible to you in ULIPs in various structures (for example, Loyalty Additions and Wealth Boosters).

Market-linked Returns

ULIP plans present an opportunity to procure market-linked returns. A piece of the premium paid in a ULIP plan put resources into funds which put resources into various market instruments such as equity and debt in different proportions. The policyholder has the potential to acquire returns dependent on the market. Investors can utilize the information, for example, the ULIP NAV, to keep a tab on returns and guarantee they remain invested in the best ULIP plans.

Death benefits

A unit-linked insurance plan provides death benefits if there should arise an occurrence of the insured's demise within the policy term. While the death benefits are procured as SA along with the value of the funds, benefits may contrast depending on the reason for the death of the insured.

Maturity Benefits

Likewise, a ULIP plan comes loaded with maturity benefits in case the policyholder lives through the maturity period of the plan. As a rule, maturity benefits are provided to the policyholder as the amount of the value of the fund. Nonetheless, some insurance companies present add-on benefits as per the terms and conditions of the policy.

Withdrawal Benefits

A unit-linked insurance plan is convenient in such circumstances. A ULIP plan permits its investors to pull out a part of the investments if there should arise an emergency after fulfilling the pre-decided time. For the most part, such withdrawals are tax-free.

By choosing to invest in the Invest 4G Plan - a Unit Linked Insurance Plan offered by Canara HSBC Oriental Bank Of Commerce Life Insurance, you can get exclusive benefits of the flexibility of shifting and fluctuation between the fund options, partial withdrawals, option to choose between eight distinct funds along with four portfolio strategies and so much more. Quit thinking and choose the Invest 4G ULIP today!

 

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