Know everything about ULIP

What is a ULIP Plan?

ULIP is an abbreviation of Unit Linked Insurance Plan. It is a life insurance plan with multiple benefits and purposes. A ULIP is like an all-in-one life insurance plan. In a ULIP, you get both insurance and investment. For a ULIP plan, you need to pay insurance policy premiums at regular intervals. From this, a part of the money is used for life insurance coverage. The balance amount is used to club with assets acquired from several ULIP policyholders. Later on, they are invested in financial instruments such as debt and equity. The best part about investing in ULIP is that you get the benefits of investments along with security against emergencies, and you can easily buy a ULIP plan online.

What are the main benefits of a ULIP Plan?

The most important benefit of a ULIP plan is that, along with financial security, you get to invest in several market-related securities like balanced funds, debt, and equity and get a chance to obtain long-term returns on your investments.

In Unit Linked Insurance Plans, like every other kind of investment, your investments are subject to market risks. Hence, ULIPs give you an option to know your risk appetite and choose from and invest in a range of funds. You are recommended to make use of a ULIP calculator in order to know the estimated premium for a ULIP and gauge the expected returns, so you know if it is meeting your financial objectives.

Let’s learn about other benefits of a ULIP plan:

Market-Linked Returns

Along with financial security, Unit Linked Insurance Plans give you a chance to earn returns by assigning a part of your premium to financial instruments based on your risk appetite.

Best of Both Worlds – Savings and Security

Along with assigning a part of your premium to market-linked financial instruments, a ULIP safeguards you and your dear ones in crisis. Hence, you can enjoy long-term returns from your investments while your family stays financially safe, as your ULIP provides you with life cover. Now that you know you are safeguarded against uncertainties in life, you can focus on saving and investing regularly as a part of paying premiums. You can build well enough money over long tenure with a ULIP, just choose your funds carefully.

Enjoy the flexibility

Unit Linked Insurance Plans or ULIPs enable you to attain your financial goals by giving you the flexibility to:

Swap the funds you are investing in based on your ever-changing needs.

You can withdraw some amount once you cross the 5-year lock-in period.

Along with regular premiums, you can keep adding to your premiums to automatically invest more amounts whenever you want.

Equal Premiums

All regular premiums should have a common premium payment structure and be uniform. If you make additional payments, then note that they will be treated as a single premium to provide life insurance cover.

Enjoy the Tax Benefits:

Note that, under Section 80C, the premium you pay towards a ULIP is eligible for a tax deduction up to a maximum limit of Rs. 1.5 lakh.