What makes ULIPs a reliable and popular investment option?
The primary goal of ULIPs is to help the policyholder create wealth to meet his and his family’s long-term needs. ULIPs is essentially a product that provides a sense of security as well growth benefits. Here are some other advantages of ULIPs:
- It provides security to your family
ULIP provides life coverage benefits to the policyholder’s family in the event of his or her death. The nominee declared will receive either the assured sum and/or the fund value, whichever is higher
- It helps you save tax
Several people are unaware of the fact that the premium you pay for ULIP is eligible for tax deductions under section 80C of the Income Tax Act. The returns received on maturity is also free from income tax.
- It helps your money grow
ULIP is the best instrument to opt for if you have long-term plans for your family. You receive a relatively high rate of interest on your investment, which also gets compounded.
- It helps you beat inflation
Have you charted out your long-term expenses? Whether you are investing for marriage, your children’s education, or even retirement, there is one constant worry that haunts us all: inflation. Considering an average annual inflation rate of about 6-7%, you know that your expenses are only going to go uphill in the future. ULIP helps you beat inflation with options to diversify your investment in equity and/or debt funds, which offer relatively higher returns than conventional vehicles such as fixed deposits.
- It allows you to be flexible
With ULIP, you have the option to switch between funds any time during the plan. You can choose among equity, growth, or income funds based on your long-term goals and risk appetite. However, given that a ULIP is less diversifiable in nature than say an equity-linked saving scheme (ELSS), the risk posed is somewhat higher.
Evidently, ULIP is a versatile plan that can help you meet your self-goals as well as plan for your future!