Essentials of Unit Linked Insurance Plans You Must Know

Insurance for women

Everybody in this era of cut-throat competition looks forward to growing their money, and market-linked investments are one of the best suitable options that usually offer a sizeable corpus in the long run. However, think of a situation where you have invested a good amount in market-linked products and any unfortunate event such as a death occurs. In such cases, your family needs to be strong enough, not just mentally but financially too. This is where the life insurance experts always advise you to go with ULIPs, i.e., Unit Linked Insurance Plans

On the other hand, many people don’t go for ULIP plans due to lack of information and awareness. Here in this article, we aim to deliver the nitty-gritty of a best ULIP plan along with the benefits. 

Unit Linked Insurance Plan

Usually referred to as ULIP investment plan, it is one of the financial instruments that offer you both insurance as well as investment provision. The returns associated with these investments are market-linked. If you are in need of getting adequate insurance coverage along with accruing a sizeable corpus, a ULIP plan is always the best suitable for you. 

By opting for a ULIP, you are entitled to capitalise on several investment tools like debts, equities, a blend of both, and even other types of bonds. On the other hand, the life cover that you have chosen secures your family’s future financially in case of unfortunate death, in addition to the investment returns. 

But the most important thing is that a ULIP is an aggressive investment plan that needs some research and knowledge of market trends. People having high-risk hunger usually go with equities as they offer sizeable returns under ULIP plans. People who have comparatively low-risk appetite opt for debts, and the moderate risk takers always go for a blend of both debts and equities.  

In short, a ULIP insurance plan is nothing but investment plus life coverage and tax benefits. 

Why is ULIP investment plans the right choice?

The money invested in the stock market generates considerable returns, but there are several other benefits of a ULIP plan. Here is a few of them-

Death Benefits- ULIP plans offer death benefits in terms of a lump sum amount which are the highest of either fund value which has been accrued, or sum assured excluding partial withdrawals if any, or 105% of the total premiums paid till the time of claim. 

Maturity Benefits- Traditionally, maturity benefits under ULIP investment plans are settled as a lump sum; however, many insurance companies let you choose the settlement option to get the amount in instalments. The settlement term can be chosen from one to five years, and the frequency of the pay-outs can also be fixed as annually, half-yearly, quarterly or monthly instalments. The fund value is also added in the maturity benefits. 

Partial Withdrawals & Surrender- If by any chance you are unable to continue with the plan, you can surrender the policy. Besides, in case of any emergency, you can withdraw the funds partially once the lock-in period of five years. 

Transparency- Many other investment plans don’t allow you to check what’s happening to your funds, and they just offer you the final accrued amount. While under ULIP plans, you can get every update of the market and do the needful in any case.  

Fund Switching- The flexibility of fund switching under ULIP investment plans is another benefit. If you notice the fluctuation in the market and foresee that the results will not be as anticipated due to the poor performance of the fund you have chosen, you can switch between the funds up to a particular time for free. 

Insurance Protection- Insurance protection is the primary benefit that offers decent financial coverage to your loved ones in case if you meet any unfortunate event of the demise. This way, you don’t need to buy life insurance policy separately. 

Investment Strategies- Most of the companies help you with the investment strategies or ULIP schemes for your plan. Based on your age and financial goals, the company suggests you the best strategy through which you can accrue the amount. Else, you can invest your hard-earned money in your choice of funds offered by the insurer. 

Tax Benefits- We strive to save on taxes as much as possible. By choosing the best ULIP plan, you can avail tax benefits on the premiums you pay towards the policy up to Rs.1.5 Lakh under section 80C of the Income Tax Act. Similarly, maturity benefits are also exempted from tax under section 10(10D) of the Income Tax Act.

To conclude, ULIP investment plans are always the best suitable if you plan wisely and stay invested for the long-term. Undoubtedly, the investment benefits you receive will also be considerable.


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