A Unit Linked Insurance Plan (ULIP) is a lucrative investment option that comes with twin benefits. While you get life insurance coverage from a part of it, the other goes into debt or equity funds that can get you good returns. Thus, it can meet both the major financial goals with one plan. With that being said, here are more reasons to invest in ULIPs.
1 Dual benefits in one affordable package
A ULIP is the sole financial tool in the country that provides the dual benefits of investment and life insurance coverage through one investment. Due to this reason, you’ll not have to purchase different investment and insurance policies to safeguard your future. It will help you save a lot on the respective premium amount and give you a better grip on your finances.
2 Major tax benefits
The investment that you make in the ULIP is eligible for tax deductions under Section 80C of the Income Tax Act. You can claim up to INR 1.5 lakh each year on the ULIP investments. At the same time, your returns during the maturity of the policy are exempted from tax under Section 10D of the Income Tax Act. That’s not all! The amount that the nominee receives after the policyholder’s death is also exempted under Section 10 (10D) of the Income Tax Act.
3 A fixed sum assured
After you invest in ULIP funds, the insurance cover offers a fixed amount to the nominees in the unfortunate event of the policyholder’s death during the policy term. The fixed amount is known as ‘sum assured’ and remains tax exempted under the Income Tax Act.
4 Withdrawal facility during the lock-in period
Typically, while making any investment of this kind, you aren’t allowed to opt for partial withdrawals during the lock-in periods. But ULIP benefits let you withdraw the amount even during the lock-in time. Of course, certain deductions and fees get subtracted from the total amount if you make withdrawals during the lock-in time. But you can still take the money out if the need arises.
5 High returns potential
When you compare it with any other investment option, the chance of gaining maximum financial rewards is higher in ULIPs. Such high returns are achievable due to investment in debt and equity funds. At the same time, with a ULIP plan, you are eligible for particular bonuses and rewards to ‘stay invested.’ Insurers provide bonuses as loyalty programs and wealth boosters.
6 Long-term growth benefit
You may pay the ULIP premium for a longer time and enjoy long-term benefits. When you do that, your money stays invested in the market for a longer duration, which can give you higher returns. This money you get from long-term ULIP benefits can be used for certain purposes like home loan down payments, children’s education, etc.
As you can understand, ULIPs are a great investment choice when the aim is to get good returns. So, apply for your ULIP investment without further delay.