In today’s world, it has become increasingly difficult to fulfil basic needs even if you have a good income. The increasing inflation has led to a rise in the gap between expenditure and income with every passing year.
People who rely entirely on their paychecks are often hit with the financial crisis, mostly in case of an emergency. However, if you take some wise steps timely, you can tackle these emergencies without breaking a sweat.
The first step is to choose an investment plan that guarantees financial security while providing you with the option of wealth creation. ULIP is one such investment option that offers you both these benefits. It is a hybrid investment product specifically designed to take care of both insurance and investment needs.
In this article, we have jotted down five reasons why you must choose a ULIP plan for a secure future. Read on to know more.
- Life Insurance Cover
One of the basic mantras of a secure financial future is to have adequate life insurance coverage. Financial experts all around the world never tire of advising investors to purchase an insurance policy that protects against life’s unpleasant surprises.
A ULIP plan is one such insurance policy. It is a hybrid product that offers both, the option of insurance and investment.
- Investment for Building Wealth
Once the protection or the life cover part is taken care of, the next focus should be on investments for wealth creation. ULIPs allow you the opportunity to invest your money in various funds.
The diverse class of funds include equity, debt and balanced options. While equity funds, have the potential to generate higher returns on your investments, debt, and balanced funds help to prevent your corpus in case of market volatility.
- Flexibility in Investment to Build and Protect the Corpus
For a financially secure future, it is crucial that you make investments that beat the inflation factor. Inflation can reduce the value of your wealth over time. However, at the same time, you also have to exercise caution while making investments so that you do not lose your hard-earned money to the market changes.
ULIP plans offer you the flexibility required in your investments, which can help in beating the effects of inflation. Through the free switch option provided by ULIPs, you can reduce and increase your exposure to funds that are performing well in the market.
You can choose equity funds when the market returns are high and switch to debt funds when the market takes a dip. The good news is that reputed insurers like Max Life Insurance provide unlimited free switches with their ULIP plans, thus, allowing you the option to reap the market benefits and protect your corpus.
- Partial Withdrawal Facility
ULIPs have a five year lock-in period, thus, allowing investors the option of long-term investment. This helps in inculcating a disciplined investment habit.
Moreover, if an occasion arises where you might need urgent funds, you can make partial withdrawals from your ULIP plan. But the vital thing to remember is that the facility of partial withdrawal can only be exercised after the lock-in period is over.
- Tax Benefits
Investments made in ULIP plans are eligible for tax deductions up to Rs. 1.5 lakhs under Section 80C. Any individual or a HUF (Hindu undivided family) can avail this benefit.
In addition, the maturity benefits availed in ULIPs are entirely tax-free under Section 10(10D) of the Income Tax Act.
Insurance-cum-Investment – Both in One!
ULIPs are insurance-cum-investment plans that offer you dual benefits. The life cover part of ULIPs can help in protecting your family financially in case of unforeseen eventualities, while the investment part helps in creating wealth for your future goals.
Moreover, if you wish to calculate your premium amount or check the returns of ULIPs, you can always use a ULIP return calculator. An online ULIP return calculator allows you to compute the amount you must invest to achieve your short-term and long-term goals.