What is ULIP?

Unit Linked Insurance Plan is a market-linked insurance-investment plan, which help you plan for long-term savings and protection. To enjoy the best out of your ULIP plan, you need to be aware of the fund-switching feature. The risk of investment in ULIP Plan depends on the fund options you have invested in. Hence, it is necessary to keep a tab on the performance of your ULIP funds. By monitoring the performance of your ULIP, you can mitigate any risks and uncertainties that hamper your financial stability in the future.

Unit Linked Insurance Plan is a unique product that provides you with the benefits of life insurance and market-linked returns. It helps an individual in long-term wealth creation. With the help of ULIPs, you can invest in the markets through its various fund options, depending upon your risk appetite. In a Unit Linked Insurance Plan, the insurer pays a singular premium monthly, annually or quarterly. This premium, however, gets divided into two ways. One is the premium of life insurance, and the other part is the investment that gets used to purchase units in your chosen ULIP fund options. The EEE ULIP benefit is still the biggest among all the advantages.

Benefit 1: ULIP plans provides dual objective

In ULIP, you get an insurance cover plus investment option, which allows your family protection throughout the policy term and provides good returns on investment at the time of maturity. You can invest in a range of funds, which are equity and debt to fulfil your long-term financial goals.

Benefit 2: ULIP plans are flexible

The fund switching option allows you to change the funds you are willing to invest in. It means you can shift your money from equity to debt or a mixture of both the funds as per your risk appetite and life stages. This is a unique feature which exists in ULIP. New-age ULIP plans offers free switches to help you garner higher returns.

Benefit 3: ULIP plans provide tax benefits

Along with protection, ULIP allows tax exemption under section 80C of the Income Tax Act. ULIP helps you to save money in a great way and helps you ensure the growth of the saved amount. The premium amount paid towards keeping the policy alive is exempt from tax under section 80C. Also, the death benefit, as well as the maturity benefit amount is tax-exempt, as per Section 10 (10D).

Benefit 4: ULIP plans are economic

The investment sector is growing rapidly as mentioned earlier, and experts are of the opinion that online as well as offline ULIP Plans are cost-effective. Online ULIP is cheaper because there is no involvement of any intermediary. It also saves your time as you can buy it sitting at your home. You just have to visit the company website, fill in your details and upload the relevant documents.

Benefit 5: ULIPs are best for long-term financial planning

ULIP insurance comes with a lock-in period of five years. ULIP plans are best for fulfilling the long-term goals of the policyholder, like buying a new house, planning a dream wedding, etc. or accumulation of wealth for foreign education of your children. As you invest money for a long period (10-15 years), it helps the money grow as the power of compounding comes into the picture. It means, your money is reinvested for the principal amount to grow year after year.

ULIPs has gained popularity within a short span of time due to its various benefits. You can customize them as per your needs.