May 22, 2024

Accelerate Your Financial Independence with ULIP

Today, as many women have become career-oriented and are taking control of their financial decisions, they look for avenues to maximise their savings for financial independence. Unit-linked insurance plans, or ULIP plans, can be an ideal instrument to do just that. Let’s understand how.

What is ULIP policy?

ULIPs are investment-oriented life insurance plans that help you invest in market-linked securities to grow your wealth. ULIP plans have different types of investment funds, mainly equity, debt and balanced funds. You choose the funds based on your risk appetite and investment needs. The premium that you pay is directed to the selected fund, which invests in a diversified portfolio of securities.Β 

As the market grows, your investments also grow, giving you inflation-adjusted returns. Not to mention, the life insurance coverage, which comes inbuilt, pays a death benefit if the insured dies during the policy tenure.

How do ULIPs help women accelerate their financial independence?

With the range of ULIP benefits that are available, they can help women achieve financial freedom quickly. Have a look at such ULIP benefits –

  • Investment and insurance in one

The USP of a ULIP is that it combines investment and insurance coverage under one umbrella. The plan not only serves as a saving tool, but it also provides financial security against premature death. Thus, with ULIPs, you can start saving for a corpus for your financial goals and also secure those goals with the inbuilt insurance coverage.

  • Good return potential

Since ULIPs invest in financial market instruments, they have a good return potential. With a long-term investment horizon, you can benefit from the growth in the market. As the market grows, so makes your investment, and you can create a considerable corpus for your goals. Moreover, the returns are inflation-adjusted as inflation is factored into the performance of the market. Thus, with ULIPs, you can earn real returns on your investments that create a corpus sufficient for your future goals.Β 

  • Flexible investments

ULIPs are flexible insurance plans that allow you complete control of your investments. Here is how –

  • You choose the premium amount based on which the sum assured is decided.
  • You choose the policy tenure, the premium paying tenure and frequency.
  • You choose the investment fund into which you want to invest.
  • You can change between the investment funds whenever you want through switching.Β 
  • You can make partial withdrawals from your fund after the lock-in period of five years. This provides liquidity and gives you funds when you need them.
  • You can pay an additional premium through the top-up family that many ULIPs provide.Β 

With these flexible choices, you can customise the coverage per your needs and also manage your investments as per the changing market dynamics.

  • Different ULIPs for different needs

There are different types of ULIPs available in the market. Have a look –

  • Whole-life ULIPs that run till 100 or 99 years of age for complete protection.
  • Child ULIPs for your child’s financial security.
  • Pension ULIPs for retirement planning
  • Basic ULIPs for saving for any other financial goal that you might have

Given the different types, you can choose one or more of the available plans and create an earmarked corpus for each financial goal.

  • Tax benefits

Lastly, to add icing to the cake, ULIPs also offer tax benefits. Here is how –

  • Premiums paid are allowed as a deduction under Section 80C up to Rs.1.5 lakhs.
  • The death benefit is always tax-free.
  • If you switch between the investment funds, no tax is levied on the amount switched.
  • The maturity benefit is tax-free under Section 10(10D) if you bought the ULIP before 1st February 2021.
  • For ULIPs bought on or after 1st February 2021, the maturity benefit is tax-free if the aggregate premium is up to Rs.2.5 lakhs3.

These tax benefits make ULIPs even more attractive and help you save tax both at the time of investments and when the plan pays the benefits.

The bottom line

So, do not wait for a special day, do something for yourself or the women in your family. Invest in a unit-linked insurance plan and take charge of your finances. Use the ULIP calculator to estimate the expected returns so that you can plan for your financial goals. Enjoy the tax benefits and insurance coverage that ULIPs offer for a complete financial package and accelerate your journey to financial independence.Β Β 

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