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How does ULIP meet your Insurance and Investment Needs

13 Nov 2021 0 COMMENT

Introduction -

Unit linked insurance plan is a hybrid policy where your investment is related to your insurance. It was first introduced in the year 1971 by the Unit Trust of India. In the past, many investors were reluctant to invest in ULIP due to their excessive charges. However, it has gained popularity recently as most investors are willing to provide this policy with bare minimum charges.

The ULIP plan covers your investment and insurance needs—by investing a specific portion of the premium in equity or debt. The remaining balance of your amount is utilized in providing insurance cover. It plays a dual role and combines insurance along with investment.

How does ULIP plan meet your insurance and investment needs

The ULIP plan is a combined plan that meets your insurance and investment needs. It caters to your long-term financial goals—such as buying a house, car or saving money for education. Thus, you need not worry about your investment needs and savings for paying for your insurance cover. It is an all-in-one scheme that offers you to make a smarter choice of investing and insurance cover at the same time.

Let us now look at the combined aspects of a ULIP policy that will help in insurance plus investment. These are:

  • ULIP insurance component:

  • In the event of your death: Like any other insurance policy, your nominee shall receive the entire assured sum. They will also receive fund value-added to the sum if you’ve chosen a specific type of ULIP plan.

  • In the event of your survival: At the end of the policy term, you will be entitled to receive the sum you’ve paid towards the premium regularly. You shall get this sum on the maturity date of your policy. For this, you will need to submit certain required documents along with the discharge form.

  • ULIP investment component:

ULIP policy provides flexibility to its investors in the investment component. It means that you get to choose where you want your portion of the money to be an investment. It will offer you a diverse set of options to invest in equity or debt. Thus, you can minimize your risks and try to gain maximum returns.

What are the advantages of ULIP policy?

Here are some of the benefits of ULIP policy you need to know. These are:

  • Regular savings:ULIP policy helps you save money in a disciplined manner. Investing some amount every month in the ULIP plan will help you achieve regular savings.

  • Provides for flexible investment: In the ULIP plan, you are in control of your investment.Having control over your investment means that you can switch from equity to balanced or debt funds at any point in time.

  • Tax saving benefits:You can receive tax-saving benefits on a ULIP plan. You are eligible to receive tax benefits under Section 80C and Section 10 D on the premiums paid and the returns received by you. On the premium amount, you can receive a tax-saving benefit of up to Rs. 1,50,000 per year.

  • Beneficial for long-term financial planning:One of the most significant aspects of ULIP policy is that it helps achieve big financial goals. With your regular investment, you can save a substantial sum of money towards buying a house, car or funding your child’s future education. You can tailor your long-term goals as per the ULIP policy.

Additional Read: Why is Investing Important and Where Should One Invest?

Conclusion:

You must select a ULIP plan based on your long-term financial goals. Investing in a ULIP policy is considered ideal as it is combined with insurance and investment. It is a smarter choice – of covering two things at once rather than focusing only on investment or insurance alone.