Benefits of ULIPs
Meanwhile, I was recently evaluating Unit Linked Insurance Plans (ULIPs) – the idea here is that you put in your money and it “grows” with time. So you also have life cover (i.e. your family gets money if you die) and money also grows at the same time. You get “units” like in mutual funds, and the value of these units grows because the company invests it for you. You also get a tax benefit under section 80C.
Unit Linked Plans offer unique opportunity to combine protection with investments. Some special features of Unit Linked Life Insurance Policies (ULIPs) are:
Provides flexibility in investments
ULIPs offer a complete selection of high, medium and low risk investment options under the same policy. You can choose an appropriate policy according to your risk taking appetite, coupled with the opportunity to switch between fund options without any additional expense for specified number of switches. ULIPs provide the flexibility to choose the sum assured and investment ratio in the annual targeted premium. It also offers the flexibility of one time increase in investment portfolio, through top-ups to avail investment opportunity offered by external environment or own income flows.
The charge structure, value of investment and expected IRR based on 6% and 10% rate of returns, for the complete tenure of the policy are shared with you before you buy a product. Similarly, the annual account statement, quarterly investment portfolio and daily NAV reporting, ensures that you are aware of the status of your investment portfolio at all times. Most companies publish latest ULIP NAV on their respective websites on a daily basis.
To cope with unforeseen circumstances, ULIPs offer the benefit of partial withdrawal; wherein after 5 years you can withdraw funds from our Unit Linked account, retaining only the stipulated minimum amount.
Disciplined and regular savings
ULIPs help you inculcate a regular saving habit. Also, the average unit costs tend to be lower than one time investment.
Multiple benefits bundled in one product
ULIP is an outstanding solution for risk cover, long term investments with the benefit of various investment opportunities, coupled with tax benefits.
Spread of risk
ULIPS are ideal for those investors who wish to avail the benefit of market linked growth without actually participating in the stock market, with the added benefit of risk-cover.