Retirement Planning: ULIPs Can Be Your Safety Net

By Jayadeep Reddy

Posted on February 7, 2019

The major challenge that comes after retirement is ‘How to spend time without spending money?’ More or less, the majority of your income sources are depleted when you retire. And without any income, it becomes hard to survive. Such a situation is one of the biggest perils you face during your retirement unless you save prudently.

You might think that if you have an EPF (employee provident fund) account, your retirement is entirely secure. However, most of the times it is not the case. To be completely free of the financial burdens after your retirement you will have to explore investment options other than EPF like NPS, ELSS and ULIP pension policy.

• NPS: National Pension Scheme or NPS is a long-term retirement focused investment plan. It allows you to invest in a mix of bonds, stocks, government securities and other assets. NPS also helps in getting tax exemptions under Section 80C up to Rs. 1,50,000.

• ELSS – The Equity Linked Saving Scheme offers higher liquidity and superior returns compared to other retirement planning investments under Section 80C. However, as it is a type of mutual fund and most of your investment goes in equity funds, it is subject to market risks.

• ULIPs – ULIPs are the financial tools that provide both investment benefits and life cover to the insured. They allow you to choose your investment option, equity or debt according to your risk appetite. Moreover, a ULIP policy also provides tax benefits under section 80C and 10D, making it the best-suited option for your retirement planning.

Investing in financial instruments is mandatory if you wish to have a peaceful retirement, and one of the best options for doing so is a ULIP policy. Below stated are factors that make ULIP your perfect saving partner and a safety net for your retirement:

• Higher Returns

When you invest your money, there are only two things on your mind: higher returns and security. Well, ULIP Pension plans provide you with both. The average returns in ULIPs are higher than other alternative retirement planning investments like Fixed Deposits, Pension Plans, Endowment Plans and NPS. The reason for these higher returns is that a part of your money is invested in the equity market (based on your preference).

• Availability of Multiple Investment Options

Every investor has a different risk appetite. Therefore, insurers like Max Life Insurance offer myriad of investment options in ULIPs based on your preferences. The three main categories include:

• Equity Funds: Where major part of your money is invested in equity markets
• Debt Funds: Where most of your money is invested in government securities and bonds
• Balanced Funds: Where your money is invested in the mixture of Equity and Debt funds

There are numerous funds present in different variations under these options. You can choose risky investments for higher returns, and as you move towards your investments, you can go for debt funds for security.

• Flexibility to Switch Funds

The volatility of the market is known to everyone, sometimes the numbers are excellent, and sometimes they fall beyond your expectations. In ULIPs you can choose equity-based funds when the market is providing good returns. And when the market is going down, you can opt for debt funds so that you can secure your investments and get the best results. This option of switching funds is only available in ULIPs which make them the best investment option for your retirement.  

• Riders Options

ULIPs provide you with the option to buy riders to bolster your plan. With additional rider options, you can customise your policy to include benefits such as critical illness cover, premium waiver, accidental death/disability cover etc. Moreover, these riders come with nominal charges. As a result, they serve better to maximise your policy benefits.

Concluding:

Retired life is one where we wish to live stress-free. By purchasing a ULIP pension plan, you can ensure that any financial burden that may fall on you after retirement will be taken care of. Moreover, by buying a plan from a reputed insurer, you can also enjoy additional benefits as well. So, hurry up and purchase one to reinforce your retirement plan with a safety net.

Retirement Planning: ULIPs Can Be Your Safety Net