Investing in 2023: Why Should the ULIP Plan Be on Your List?
With the changing market dynamics, investor needs and outlook towards benefits of investing, investment options and creating a robust financial plan have gained importance. As a result, people are now moving over from traditional investment options like fixed-income instruments (FDs etc.) and are increasingly looking up to hybrid investment options like the ULIP plans.
ULIPs are insurance policies that are linked to the market. So if you want to get a life insurance cover and invest in assets like equities, bonds, and mutual funds, ULIP investments are an ideal option. Read on to know why you should take advantage of investing in ULIP in 2023.
Why Should You Consider Investing in a ULIP Plan in 2023?
ULIP investments offer you financial support and good returns along with life cover. Also, investing in ULIP has become very easy. For example, if you wish to invest in ULIP offered by Tata AIA life insurance, you can visit their official website and buy their plan online.
Let us look at some of the advantages of ULIP and the reasons that make them one of the best buys of 2023.
- You can take control of your investments.
A ULIP plan offers tremendous flexibility and helps you take control of your ULIP investment. You can choose a plan based on your risk appetite, age or goals. There are plans with high risk (equity) translating into high probable returns and plans with low (fixed income instruments) or medium (combination of equity and fixed income instruments) risks which typically offer lesser returns.
Apart from this flexibility in choosing the fund, you can switch between two plans or change the life cover based on your life stage. Additionally, you can add riders to your plan at a nominal price to expand the coverage.
- You get dual benefits.
As the name suggests, ULIP investments provide you with life cover to protect your loved ones in case of an unfortunate event and an opportunity to receive market-linked returns. Unlike any other insurance plan, it offers exposure to long-term wealth creation.
- You can liquidate your investments after 5 years.
ULIP insurance has a lock-in period of 5 years. Once this lock-in period has ended, you can fully or partially withdraw funds from your account without any charges.
- You inculcate a habit of regular saving and investing.
ULIP investments allow you to save a chunk of your money by investing regularly. With SIPs (Systematic Investment Plans), you can set aside a small portion of your income and take advantage of the power of compounding after a few years. With Tata AIA life insurance’s ULIP plans, you can start investing with as little as ₹1,000 per month.
- You can accumulate wealth to realise your financial goals.
ULIP insurance plans inculcate the habit of saving for your future goals and aid in wealth accumulation and growth. Since the funds are invested longer, you can create a corpus by allocating it to equity or debt instruments.
- You get tax benefits.
ULIP tax benefits are one of the major highlights of this product type. ULIPs are categorised under EEE (Exempt-Exempt-Exempt), making them highly lucrative.
ULIPs are subject to tax deductions under Section 80C of the Income Tax Act of 1961. Under this section, an investor can avail of deductions up to ₹1.5 lakhs on ULIP premiums paid.
Additionally, under Section 10D of the Income Tax Act of 1961, the amount you get at the maturity of your plan is considered tax-free.
Furthermore, under Section 10 (10D) of the Income Tax Act of 1961, the death benefit received by the nominee upon the insured’s death is also tax-free.
Things to Consider Before Investing in A ULIP Plan
If the above points are convincing enough for you to start investing in ULIPs, consider these things before you choose the plan.
- Check your financial goals and for maximum sum assured.
- Do a risk assessment.
- Compare features, premiums, charges, etc., using a ULIP calculator.
- Check the performance of the funds.
- Do the assurance’s reliability check by knowing their Claim Settlement Ratio, Solvency Ratio etc.
ULIP benefits are not restricted to individuals of a certain age group or risk appetite. However, investing in a ULIP plan in your mid-30s is quite favourable. With ULIP plans, you can create a large corpus to accomplish your life’s goals and provide protection simultaneously.