A ULIP policy is an insurance plan that includes an investing component so you can save for the future. ULIP insurance may be utilised for a variety of purposes, including vacation, retirement, house remodelling or purchase, child’s education, marriage, etc. That’s why ULIP insurance is good for goal-based investing. It helps you grow your wealth and provides ULIP taxation benefits, life insurance, and financial security for your loved ones.
ULIPs are one of the finest alternatives for goal-oriented individuals due to the numerous varieties of ULIP plans accessible in the market. Below are some of its properties –
- It provides a variety of investing opportunities
ULIP options provide a variety of customisable features that may accommodate any risk tolerance and fit with any type of objective. ULIP plans now provide a wide range of funds, including debt, equity, and balanced funds. As a result, you can purchase a ULIP plan that suits your life objectives.
For example, if you have a long-term saving goal, like your child’s education, you can opt for equity funds, which will spread your risks over a long time. Equity funds will also provide you with larger returns.
You may also change from one fund to another with ULIP plans. If you begin your strategy by investing in equities, you may subsequently switch to a debt or balanced fund for free. Every objective necessitates a distinct investing approach; a ULIP insurance provides this advantage with a wide range of fund alternatives.
- It helps you to save in a systematic manner
ULIP insurance plans instil the habit of regular saving, which is necessary for goal-oriented investing. You may pay your premium in monthly, annual, or half-yearly instalments with a ULIP. This allows you to save at your own pace, without sacrificing your current requirements and expenditures.
Furthermore, the tax advantages of ULIPs help you to lower your tax bill and save more money. Section 80C of the Income Tax Act, 1961 allows you to deduct the premiums you pay for a ULIP plan. You may allocate more toward your goal with the money you save on taxes. Under Section 10(10D) of the Act, the maturity benefits also provide tax benefits, subject to certain criteria and limitations.
- ULIP can offer a high rate of return
As previously said, a ULIP programme may provide you with a variety of investment alternatives, including equity, debt, and balanced funds. You can choose a fund and receive adequate ULIP returns based on your goals and investing ability.
Equity funds, for example, can provide large returns at a high risk. But debt funds can be low-risk and low-return investments. Finally, balanced funds can provide a moderate level of risk and return.
Depending on your financial goals, a combination of these funds can help you improve your investment fund’s value and beat inflation over the long term.
- It gets rid of the necessity for debt
A ULIP plan could be a great method to increase your money while also meeting a variety of objectives. It assists you in organising your finances in preparation for a future goal. This way, you don’t feel compelled to rely on debt to meet your requirements.
It also teaches you financial discipline since you invest money toward a future goal rather than wasting it on frivolous purchases.
- It addresses both short- and long-term objectives
A ULIP policy may be utilised for both short and long-term requirements. ULIP plans include a five-year lock-in term, after which you may withdraw your funds. This makes a ULIP easy-to-use for a variety of objectives.
For example, if you want to save for a comfortable retirement, you can pick a ULIP plan with a 25-year policy term. If you’re saving for your children’s wedding or higher education costs, though, you can save for a 10- to 15-year period. You can use a ULIP plan calculator to estimate monthly premiums.