As a result of the country’s growing financial literacy, many young individuals are exploring investment options to invest their hard-earned money. An ideal investment is the one that provides high returns with low risk. You must evaluate your risk appetite carefully before starting any investment. For the youth in the initial years of their career and are looking to make a goal-based investment, a Unit-Linked Insurance Plan (ULIP) can prove an ideal investment option. Let us look at some important Unit-Linked Insurance Plan (ULIP) details.
What is the ULIP Plan?
A ULIP is a modern investment option that has gained immense popularity due to its high returns. The ULIP returns can be utilized to meet long-term goals such as buying a house, managing wedding expenses, etc. Insurance companies offer a ULIP, which provides investors with insurance and investment under a single integrated plan. It is a long-term systematic investment plan that allows you to invest your money in discipline. In addition to that, you can also calculate the probable returns beforehand with an online ULIP calculator.
Now that you have a fair idea of what ULIP is, let us have a quick look at some of the primary benefits of investing in ULIPs:
Flexibility
- A ULIP investment allows you to invest your money per your financial requirements and risk appetite. Moreover, it will enable you to switch between fund options without any additional cost for up to 12 switches in a year. According to the fund you choose in ULIP, the insurer invests a portion of your premium in either the the equity or debt market. Each fund has a specific value, known as Net Asset Value (NAV). The ULIP NAV changes daily and is calculated once every business day.
- If you invest in ULIP, you also get the flexibility of increasing your investment portfolio through top-ups. This can help you make the most of investment opportunities.
- Since ULIP plans also provide insurance coverage, you can choose your sum assured at the beginning of your policy.
Liquidity
Another major advantage of ULIP is liquidity. You can choose for partial withdrawal of funds in case of unforeseen events.
Higher returns
ULIPs are considered a long-term investment plan. The returns provided by ULIPS are better than those of traditional fixed deposits. Moreover, considering the market’s volatility, the low risk associated with ULIPs makes them an ideal investment option. Therefore, the youth looking to enter the equity world to meet their long-term investment objectives can rely on ULIP investment.
Tax benefits
Investing in ULIP also makes you eligible for various tax benefits. Under section 80(C) of the Income Tax Act, the investments made in ULIPs are eligible for tax deductions. You can also receive a tax-free Maturity Benefit under Section 10 (10D).
Before starting your ULIP investment, ensure you meet the entry age criteria given in the policy document. Now that you understand the various details of a ULIP plan invest wisely and make the most of it. However, it would help if you compared multiple programs offered by different insurance providers before making the final decision. This will allow you to settle for a ULIP plan that best suits your needs.
