Financial planning is extremely crucial for everybody to secure their loved ones’ financial future or meet theirmonetary requirements. Investing your hard-earned money in the right financial product is vital to capitalize on investment returns within a specific and reasonable period. With numerous investment instruments available in the market, selecting the ideal option can be a daunting task.
You caninvest in instruments like Public Provident Fund (PPF), fixed deposits, mutual funds, stocks, and Unit-Linked Insurance Plans, among others. However, it is difficult to determine which investment option can help you earn maximum returns. So, if you are clear about what you want, it becomes easier to pick the right product.
If you are looking to purchase an insurance plan and are searching for the right wealth creation tool, a Unit-Linked Insurance Plan (ULIP) can be the best bet. ULIP insurance offers numerous advantages as compared to other financial products.Here is why ULIPs have an edge over other investment instruments.
ULIP offers the double advantages of life insurance and investment in one product, which helps you, secure your family’s financial wellbeing and plan your forthcoming finances to meet various life goals.
Choice of investment options
ULIPs are considered less risky when compared to other financial instruments, like mutual funds. They offer a wide range of investment choices that you can select according to your risk-bearing appetite.
- If you are looking for safe investments, opt for debt funds
- If you are going to take moderate risk, invest in balanced funds
- If you are willing to take a substantial risk, put your money in equity-based ULIP insurance
Flexibility of switching
The possibility of moving from fund to another is one of the many ULIP benefits that can help you to save a significant sum in case of volatile market conditions. No other financial instrument offers this facility.
Provision to add a top-up facility
ULIPs have a feature where you can add an extra top-up over and above your current premium. You can include this top-up anytime during the policy’s tenure. Doing this can help you reap the benefits of a well-performing ULIP. For this purpose, theULIP chargesrange from 1 to 3%. These costs vary among insurers.
Opportunity of adding a rider
Another amazing ULIP benefit is the option of including a rider. If you want add-on protection apart from your existing plan, you can add a rider. For instance, you can include an accident benefit rider in your life insurance plan. This ride will provide financial assistance if you meet with an accident.
Ideal long-term investment option
If you are looking for the perfect long-term investment avenue, it is advisable to invest in a ULIP. It is because the performance of the ULIP depends on the stock market. Investing with a long-term perspective can help you sustain the market’s volatility,and you can earn significant returns.
As per Section 80C of the Income Tax Act, 1961, you can avail of a tax deduction on the premium that you pay towards ULIP. The current permissible limit is INR 1.5 lakh per annum. Moreover, the payout that you receive on maturity is tax-exempt under Section 10(10D) of the Act. Unlike mutual funds or other financial products, Long-Term Capital Gain(LTCG) tax does not apply to ULIPs. This ULIP benefit makes the most sought-after investment alternative.
With all these advantages, ULIP is the go-to investment option.It provides you with life insurance and the chance to grow your wealth with market-linked investments. Additionally, the approximate returns earned from a long-term ULIP investment ranges between 10-12%, which is much better than any other financial instrument.