7 reasons why you should invest in a ULIP

For those of you not well versed with what a ULIP is, it is investment, and insurance rolled into a single plan. Apart from providing you with life cover, ULIP invests your money in debt or equity funds and offers you the returns at the time of maturity. We give you seven reasons why you should opt for a ULIP plan to secure the financial future

ULIP plans offer life cover to the family of the insurer, along with investing your funds in different equity and debt-based financial instruments. A pre-decided amount from the premium is invested in your choice of funds. The investments can grow over time, and you can get back the returns of the investment on maturity. It helps you accomplish your financial goals in the long term.

The policyholder is eligible for tax rebates at every stage- the investment, returns as well as withdrawal. The premiums you pay towards the policy are exempt from taxation. The payouts, in case of something happening to the insurer, has also been declared tax-exempt by the Government. Also, the returns from your ULIP investment at the time of maturity are free from any tax burden.

ULIPs allow you to increase the amount that you are investing in the policy. In case a fund that you have opted for is performing well, you can take advantage by investing surplus money in the ULIP investment. You can use the top-up facility provided to increase the premiums and invest more money in the policy.

Though the charges associated with a ULIP policy are higher initially, they reduce over time. The charges are significantly less when compared to the high returns. Thus ULIP plans are beneficial in the long run.

ULIPs are known for their versatility. Switching option enables you to switch between the funds that you are investing your money in. You have the option of switching between equity, debt and hybrid funds depending on your risk appetite and requirement. It is beneficial for investors who follow the capital market. This enables them to maximize their ULIP returns.

After a lock-in period of three to five years, you may choose to discontinue the ULIP plan. However, you would not have to forego the collected returns on your investment. The funds can be withdrawn periodically. Insurance companies only charge a fund management fee and one-time discontinuance charges on the corpus.

ULIPs are better than other policies in the market. You have the liberty of investing in different asset classes. You have the option of switching between funds; thus, you can opt for a better performing fund by paying a nominal switching charge. It can help you maximize your ULIP returns on maturity. Besides, you get the benefit of Insurance. In comparison, traditional endowment plans only offer you insurance coverage without the option of investment.

A well-managed ULIP insurance plan can give you the best returns along with financial security to your family. You need to make sure to opt for a reputed Insurance company with a higher claim settlement ratio.