A Unit Linked Insurance Plan (ULIP) is one of the best comprehensive life insurance plans which offers investment-cum-insurance benefits. If you want to invest in long-term financial insurance investments with market-linked returns that can secure your family’s financial needs, then a ULIP is certainly the best choice. However, you have to keep a few things in mind before buying a ULIP plan to get the maximum benefits out of the plan.
- Dual benefits: A ULIP policy is a type of life insurance plan that provides the dual benefits of insurance and investment. One portion of the premium is used for life cover and the rest is invested in the securities market. So, if you are buying a ULIP plan, ensure optimal usage of the benefits to protect your family in your absence.
- Rider options: The ULIP plan offers add-on rider options to enhance the benefits such as accidental death benefit rider, critical illness rider, terminal illness rider, total and permanent disability rider etc. With the rider options, the insured amount becomes payable if the related contingency occurs. The sum received can help tide over the financial crisis.
- Risk allocation: One portion of the premium amount is invested in the securities market. However, you can choose the fund based on your risk tolerance level. Choose debt funds for low-risk returns, equity funds for higher returns and hybrid funds for medium returns.
Also, during the policy term, if you feel that the fund is not performing well due to the economic condition, you can switch to a different fund for better returns. It is one of the key benefits of the ULIP plan. However, as the funds are managed by an expert team in the insurance company, it is reliable and quite safe to invest in the ULIP plan compared to investing directly in the stock market.
The TATA AIA ULIP plan offers 11 funds with varying risk profiles, allowing you to invest as per your risk appetite. Buy a ULIP plan online and get notified instantly for immediate actions and best profits cost-effectively.
- Fund charges: As the insurer manages the policy, allocate funds for investment, operates the fund and takes the necessary steps to secure your investment, the charges are slightly higher. Some of the prominent charges included are policy administration charges, fund management charges, switching charges, premium allocation charges etc. However, considering the benefits of ULIP, it is always worth the investment and charges included.
- Lock-in period: The ULIP insurance investment has a lock-in period of five years. It is only after these five years that a partial withdrawal is permitted. However, the waiting period is considered a boon because it ensures a long-term investment for better benefits.
- Tax benefits: A ULIP plan is considered one of the best tax saving insurance investments. The premium amount paid towards the plan and the returns received qualify for a tax deduction and tax exemption under the Income Tax Act, 1961.
- Flexible options: A ULIP policy offers flexible options to plan for your investment. For example, you can choose to pay the premium amount for a limited period such as 5, 10 or 15 years in regular payments. However, the life cover and investment benefits are offered for the complete policy term. You can use the ULIP calculator to try the different premium payment options to choose the optimal one based on your income.
Conclusion
If you are looking for a safe investment option that provides life cover to protect your family’s financial requirements, you have to purchase a ULIP plan. It is the best option because it provides market-linked higher returns in the long term. Also, it provides add-on rider options to enhance the insurance benefits. With flexible options, you can customize the plan as per your needs for a comfortable and profitable investment.
