A global pandemic has changed the way we lead our lives. It has forced people to take a good look at their health and finances. When we talk about finances, many of us certainly have a substantial investment portfolio that is aligned with our future financial objectives.
But a pandemic-like situation can disrupt investments easily. Hence, it is necessary that you make your financial portfolio robust, and ULIPs help you do just that. So, what is ULIP plan? Well, ULIP is an insurance plan that offers dual benefits of life insurance coverage and wealth protection under a single policy.
Here’s how ULIP investments make your financial portfolio robust so that you are prepared for unforeseen financial crises in the near future.
- Protection
When planning a financial portfolio to accomplish your future goals, protection of yourself and your family should be a priority. Hence, having insurance coverage is essential. The Unit Linked Insurance Plans (ULIPs) is one of the insurance plans available in the market that offers financial protection to you and your loved ones.
Here, a part of the premiums paid is utilised for life insurance coverage. That way, any unforeseen medical expenses or loss of income due to your death will not put the family in a financial turmoil. ULIPs are ideal for any investors who are looking to protect their loved ones financially and build wealth over time.
- Savings
As we all know, it is vital that you contribute at least 10 per cent of your financial portfolio towards savings. A ULIP insurance will not only help you protect your loved ones with a life insurance plan but also save a substantial amount for the future so that you can achieve your life goals.
As mentioned earlier, a portion of the ULIP premiums is contributed towards life insurance. Whereas, the remaining part is invested in market-linked funds. Now, depending on your risk appetite, you can choose to invest in debt funds, equity-oriented funds, or a combination of the two.
Also, ULIPs offer the liberty to switch between funds to ensure maximum returns. On the other hand, after the five-year ULIP lock-in period is over, you can make partial withdrawals to adhere to any impromptu financial needs. It is always advised to stay invested in a ULIP for a longer duration to be able to maximise your returns.
- Wealth Creation
As mentioned earlier, ULIPs allow you to invest a part of the premiums paid towards market-linked funds. In fact, there are many ULIP investments available in the market that enable you to save money based on your goals.
For those looking to build finances for their child’s educational future, consider buying ULIP child plans; whereas for people savings towards their retirement can consider ULIP retirement plans. Basically, based on your future financial goal, there is a ULIP plan associated that helps you achieve it.
To Sum It Up!
ULIPs are primarily an insurance product, but they help meet short- and long-term investments as well. All you need is to evaluate your current financial situation, your monthly expenses, and future financial goals. Based on the evaluation, you can then choose a ULIP investment that will help you fulfil these objectives.
Also, ULIP plan offers several tax benefits. The premiums paid towards ULIPs can be claimed for tax deductions under Section 80C of the Income Tax Act, 1961. The partial withdrawals, death benefits, and maturity benefits are tax-free under Section 10(10D).
Note that partial withdrawals can only be made after the completion of the five-year lock-in period. The death benefits include the sum assured amount for life insurance as well as the returns earned on the investments, and shall be received by the beneficiaries of the policy.
Considering the impact of the pandemic on the stock market, it is necessary that you make your financial portfolio robust. If you do not have a ULIP investment yet, consider buying one after evaluating your current financial situation and expenses. Do not be hesitant to buy insurance, as it comes in handy in times like these.
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