ULIPs give policyholders dual benefits of life insurance and long term investment

The income earners can reap dual benefits by investing long-term while ensuring financial security for their families through an additional life cover provided by the unit linked investment policies (ULIPs). These plans will also offer additional advantages like income tax exemption and freedom to withdraw policy amount in installments even after maturity.

Hyderabad: To create wealth in the long term, equities are the best investment plans that come with multiple benefits. In this, the unit-linked investment policies (ULIPs) are the most ideal for those seeking dual benefits of both investment and insurance. When markets are unstable, many people would not like to show interest in such policies and postpone their investments. But they must keep in mind that there is no fixed time to enter the market. It is discipline and long-term planning that bring returns regardless of risk factors, market slowdown and financial stress.

These days, in addition to investment, insurance and tax exemption, the ULIPs are offering some more advantages. Freedom is given to policyholders to choose any fund suitable to their investment and security plans. Moreover, the insurance companies are also offering flexibility by giving free switching facility. During the course of their existing policies, the policyholders can change and adopt new investment plans in order to increase returns. The benefits can be reaped in one go on maturity of the policies. Or else, income can be earned for a fixed period of time after closure of the policy.

ULIPs will help in enhancing one's wealth by making premiums periodically per month or quarterly or half yearly. Based on income and other expenditure, premium can be fixed. Paying premiums under ULIPs in a disciplined way will lead to good returns. After maturity of ULIPs, the policyholder is given freedom to either claim policy amount lump sum or withdraw it by installments. So, this investment can be continued in the market ever after maturity and it will continue to yield income. This way, one can get more returns.

If we want to get assured returns, we should continue making investments over a long period of time. The ULIPs are usually long term plans. So, these will help in withstanding short term instability. As a result, we get an opportunity to minimise the risk factor that comes with market volatility and financial instability.

With due diligence, all income earners should take a life insurance policy to ensure security to their entire family. At the same time, an effort should be made to create a steady income source for the family members. There should be easily understandable financial plans for the family. For them, the ULIPs are the most suitable policies. One should not forget the protection that always comes with a proper insurance policy in addition to other benefits.

Apart from other benefits, the ULIPs also offer the advantage of claiming income tax exemption. The premium paid under the ULIPs is eligible for exemption upto Rs. 1.50 lakh under Section 80C of the Income Tax Act 1961. Even the benefits drawn under the ULIPs are eligible for tax exemptions under Section 10 (10D) of IT Act.