ULIP: A lucrative option to create a financial corpus

Unit Linked Insurance Plan (ULIP) is a unique amalgamation of insurance along with investment. The main objective of a ULIP investment is to provide wealth creation along with life cover. Here the insurance company divides your investment into two portions. The first portion of your investment put towards life insurance, while the second is put into a fund. These funds are either equity or debt or both and are designed to meet your long-term goals.

In this article, we will take a look at some of the reasons to invest in a unit-linked investment plan.

Why should you invest in ULIPs?

Life cover: 

This is one of the first and primary reasons why you should invest in a ULIP plan. This investment comes with a dual benefit of both – life cover and investment. The security aspect of ULIP is something that a taxpayer’s family can fall back on. You can claim the returns in times of emergencies such as untimely death of the investor, etc.

Income tax benefits: 

Unlike many investments, the payable premiums towards a ULIP are eligible for a tax deduction under Section 80C. Also, the returns gained with this policy on maturity are exempt from income tax under Section 10(10D) of the Income Tax Act of India.

Financing long-term goals: 

Another benefit of ULIP is that the returns earned on the maturity of the policy will allow you to fulfil your long-term goals, such as buying a house, a new car, marriage, etc. The reason being the finances invested in ULIP gets compounded. This helps to give more net returns as compared to any other investment. However, to ensure that you make the most of these features, you cannot exit the 5-year lock-in period. Once you complete the lock-in period, you can enchase the returns earned and retain it in a savings account or the form of an FD.

However, in order to make the most of the ULIP investment, keep the policy going on for a longer time.

Ease of portfolio switch: 

As mentioned earlier, ULIPs are crafted, keeping flexibility as the core. Hence, based on your risk appetite, switching to between a debt and equity funds is easier. You can also change your investment when the market is performing low. This allows you to deal with inflation and market fluctuation quickly.

We hope we have given you enough reasons to think over a ULIP investment.