5 Reasons Why ULIPs Are A Good Investment

Because family is by far the most valuable possession to each of us, and we go to tremendous lengths to ensure that our loved ones are safe and secure. Purchasing an item to help pay for any unforeseen bills is the best way to prepare for the future. ULIPs are the simplest to acquire of all the coverage options available today, and they give far more comprehensive coverage. ULIPs, on the other hand, are unique among insurance products since they combine life insurance and investment returns into one package. ULIPs also provide you the option of investing the premium in a range of market-linked stock and debt instruments, thereby enhancing your profits.

ULIPs Are A Good Investment For 5 Reasons

Here are five reasons why you should buy ULIPs:

• Management of Risk

If you don't want to engage in the risky stock market but yet want to profit from market-linked investments, ULIPs are an excellent solution. The many investment opportunities available through ULIP enable you to build your idle money based on your risk tolerance. Some investors are often hesitant to purchase ULIPs because of the expenses, such as mortality charges. These advantages, however, make ULIPs lucrative in the long term, helping you to meet your financial objectives.

• Various Investment Options

You have a lot of alternatives when it comes to investing money through ULIPs since you may select from a number of assets. You may invest in a variety of equities and debt funds through ULIPs. You may also divide the investment to attain the right balance by allocating resources to different types of funds. Based on your risk appetite: low, medium, or high, you may create an appropriate investing portfolio. If you want to take advantage of an extra income stream or a changing financial market, you may use ULIPs to make top-up investments. You have total control over the sum guaranteed and premium because a ULIP is essentially a life insurance policy. You can adjust the quantity to suit your needs.

• Tax advantages

A ULIP investment plan has two tax exemptions, allowing you to save more on your investment and returns. Here are a few examples:

The premium paid is eligible for an annual deduction of up to INR 1.5 lakh under Section 80C of the Income Tax Act, 1961, while the maturity benefit is tax-free under Section 10 (10D) of the Income Tax Act, 1961. According to the present Finance Bill, if the yearly premium for your new ULIP investment exceeds Rs 2.5 lakh, the return would no longer be tax-free. The income/return on maturity is treated as a capital gain under Section 112A and is accordingly charged.

• Withdrawal in Parts

The key advantage of ULIPs is that they allow fractional withdrawals beyond the first lock-in period. In theory, partial payments are restricted to commitments imposed by insurers. As a result, you might withdraw a significant amount from the corpus at any time to meet your liquidity obligations. 

• Flexibility

ULIPs are mutual investment vehicles that may be used to invest in stocks, bonds, or a mix of the two. It is a platform that allows them to link and exchange investment amounts based on their asset allocation and risk appetite. Stock funds, for example, are a good choice for people who want to grow their money. Convertible bonds, on the other hand, are a feasible alternative for investors searching for long-term value. Several respectable insurance companies enable investors to make several free transfers every year.

Take Away

To begin, ULIPs are financial products that combine life insurance and market-linked savings. For that purpose, ULIPs are referred to as "two-in-one" plans since they offer both life insurance and savings to a person.

Also read- What Is The Distinction Between ULIP and ELSS?

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