What is a ULIP Policy? It is a unique plan that offers investment and life insurance opportunities. With the premiums you pay, you get life insurance in this plan along with market-linked fund options. There are several benefits that ULIPs have to offer which make them a popular choice.
ULIPs may provide tax advantages on both the premiums paid and the returns received at the end of the policy in addition to these advantages.
There are five good reasons to buy ULIPs:
- ULIPs Offer Flexibility
- Freedom to select your fund option: The majority of ULIPs offer a selection of equities, debt, and balanced fund alternatives. You can invest your money accordingly to your risk tolerance and expected return. To assist you in getting good returns, ULIPs can also provide you with the option to transfer your money across several funds.
- Ability to modify your life insurance: You can select your Sum Assured at the outset of your policy with ULIPs. Some ULIPs additionally allow you to raise your Sum Assured over the course of the policy to accommodate your changing protection needs (E.g. marriage, childbirth, etc.)
- Flexibility to alter the amount of your premium investment: You can pay a top-up amount which can be used to maximise returns.
- Ability to choose a rider: Riders are optional features you can use to personalise your ULIPs and obtain extra insurance. You can choose these riders as an add-on benefit towards your plan for which you have to pay an additional premium.
- ULIPs Offer Transparency: With the aid of the following characteristics, the charging structure of ULIPs is visible and enables you to make wise decisions:
- Benefit Illustration: You have the right to request a sales benefit illustration as a customer. You can better comprehend your premium consumption and insurance costs with a benefit illustration. Additionally, it draws attention to crucial details regarding potential returns based on the selected Sum Assured and premium.
- Product brochures and key feature documents: Although benefit illustrations are very helpful in describing the quantifiable components of ULIPs, you must comprehend all of the other features and benefits that ULIPs offer. See the product booklet to learn about the specific benefits of your policy. You may receive a key feature paper outlining the significant aspects of the plan. This, along with the product literature, ensures that you fully comprehend the plan that you have bought.
- Free-look period: Most life insurance policies, including ULIPs, have a free-look period. If you are unhappy with your insurance policy, you usually have 15 days to cancel it. The entire premium, excluding necessary fees, may be returned to you.
- NAV: Net Asset Value: It’s crucial to regularly check on how your coverage is holding up. The company publishes daily NAV updates to assist you in doing this. The NAV is the cost at which a fund’s units are bought. You can see how well your investments perform by looking at changes in the NAV value (increases or decreases). You can check out the latest information on our website, www.iciciprulife.com, to compare fund performances and make wise judgments.
- ULIPs Promote Savings With Goals
You must save money to achieve your major life objectives, like purchasing a home, paying for your children’s higher education, or guaranteeing a happy retirement. ULIPs support disciplined investing because they are made to help you achieve important financial objectives. Without such a strategy, you risk sacrificing your long-term objectives to meet immediate requirements.
- ULIPs Provide Tax Advantages
The tax-saving tools that provide unrivalled ULIP tax benefits over the life of your policy:
- Entry Advantage: You obtain Section 80C and Section 80D tax benefits on your premium payments.
- Earnings Advantage: Your investment’s returns are not taxed
- Exclusive Switching Advantage – You can make debt-to-equity switches entirely tax-free*.
- Exit Advantage: Under Section 10, you additionally receive a Maturity Benefit# that is tax-free (10D)
These vary depending on the old/new tax regime. All the tax benefits mentioned above are subjected to changes as per tax reforms.
- ULIPs provide liquidity
A ULIP permits partial withdrawals of funds after the 5-year lock-in period, which is one of its characteristics. This service allows you to access a portion of your insurance payout when needed. This makes sure that you’re always prepared financially for emergencies. Additionally, you can withdraw the money as often as you require.
However, it is advised to avoid withdrawing from your ULIP unless necessary. Frequent withdrawals may hinder your long-term financial goals for which you have been investing.