Unit Linked Insurance Plans

Life insurance is becoming a preferred option for investors. Life insurance products such as unit linked insurance plans are considered as a more reliable wealth creation solution for a long term purpose, keeping in mind the tax savings, returns, and protection. Amongst various investor friendly features, one of the unique things about ULIP is that it permits investing one’s premium in a perfect mix of debt and equity funds in different proportions. Moreover, it’s an investment option that stands out from other market-linked investments. Unit linked insurance plan is a useful financial tool that can be used to bridge the gap between several investment options along with the benefits of significant tax savings. Here are the following 4 reasons that show why ULIPs are the best choice:

1- It offers deductible premiums: Unit linked insurance plan is an insurance plan where the premium paid is invested in debt, equity or money making instruments. The premium paid towards this policy is allowed as a deduction under Section 80C of the Income Tax Act. Besides, a ULIP allows the policy holder to choose their preferred asset class. So, if you want to enjoy high returns with minimal risks, you can opt for a combination of debt, equity, and money market investments. Also, one has the freedom to switch asset classes. ULIP investors can switch from one asset class to another. Not enough, in the case of ULIP, although one can modify the investment strategy and can easily switch to a greater allocation of low-risk debt investment.

2- Milestone-centric planning: ULIPs generally have a minimum lock-in period of around five years. This policy holder permits you to make partial withdrawals after this particular period. One can use ULIP investments to plan for significant milestones, such as education, marriage, home, purchase or marriage of your children.

3- It offers tax-free withdrawals: Along with other benefits, ULIPs also offer great tax savings on withdrawal that are not available to mutual fund investors. Withdrawals generally occur in the following instances:

• Maturity of the policy
• Death of the policyholder.
• Partial withdrawal at the discretion of the person who is holding the policy.

Over and all, investing in ULIPs is the most elegant and the simplest way to enjoy the benefits of life cover, high returns, and tax savings with less risk of losses or other complications.