What Makes ULIP the Best Long-term Financial Investment Option?
With the struggles of 2020 we all faced, one thing is clear; building a financially secured future should be everyone’s top priority. If you want your loved ones to stay safe, irrespective of all the uncertainties of life, it is essential to plan your investment right. You must find options that will help you grow your money over an extended period and leave you with a fortune. The one investment instrument that scores high in this regard is a Unit-Linked Insurance Plan (ULIP).
ULIP offers many benefits that make it a perfect long-term investment instrument. Read on to learn more about its plus points.
1.Dual benefits
The Unit-Linked Insurance Plan meaning is a life insurance policy that offers the additional facility of wealth creation. While buying a life insurance policy, you need to ensure that your loved ones will have monetary security during your absence. Remember that you cannot build a sound financial plan without suitable investment avenues. ULIP stands out from other investment instruments, as it brings both of these facilities together, making it easier for you to plan your future.
After deducting applicable charges, the insurer invests your ULIP premiums in multiple equity, debt fund options available in your plan, depending on your risk tenacity and monetary goals. They release the Net Asset Value (NAV) of all investment funds regularly. So, you know the funds’ worth on any given day. With ULIP NAV, you can keep a close eye on how the funds are performing.
2.Wealth creation to meet financial goals
ULIPs help you fulfill your aspirations by creating substantial wealth over a long period. ULIPs let you choose where to put your hard-earned money. So, you can invest in different funds. You can create an investment portfolio depending on your risk-taking capability and build wealth over a long duration. With ULIPs, you can invest your money depending on your financial goals, like buying a house or a car and financing your children’s higher education, among other objectives. It is simpler to grow your money with ULIPs, as they provide flexible investment alternatives and offer you more control.
3.Risk management
When you put money in a ULIP plan, you can invest as per your risk-taking ability. If you are willing to take risks to create wealth, faster equity-based ULIP funds will help you do so. However, if you are a risk-averse investor and are comfortable in letting your money grow over an extended period, you can select debt-based funds.
4.Fund-switching
Fund-switching is a unique offering in ULIPs that allows you to shift between equity and debt funds depending on your changing needs. For example, if you have invested primarily in debt funds but are not happy with the current ULIP NAV, fund-switching will permit you to move to equity funds. Similarly, if the financial market becomes volatile, you can transfer the capital from equity funds to debt funds to secure your money.
5.Tax benefits
ULIPs provide multiple tax exemptions, allowing you the opportunity to save more with your investments. The premium paid for the ULIP is tax-deductible up to INR 1.5 lakh yearly under Section 80C of the Income Tax Act, 1961. ULIP’s death benefit is also tax-free, ensuring your nominees can use the entire amount to meet their financial goals. Section 10 (10D) also makes the maturity benefit of ULIPs bought before February 1, 2021, tax-exempt. For policies initiated on or after February 1, 2021, the maturity benefit will be tax-exempt only if the annual premium is under INR 2.5 lakh.
These pros show why a ULIP plan is the most promising long-term investment avenue in India. You can visit your preferred insurance provider’s website and buy a policy within minutes.