The combination of insurance and investment make ULIPs an excellent choice for every investor. The modern-age ULIPs are as good as mutual funds. Read this post to know more.
Unit Linked Insurance Plans, popularly known as ULIPs, are life insurance-cum-investment products. A certain part of the premium you pay for ULIP is invested in the fund of your choice, and the rest is used for life insurance.
Moreover, to meet the insurance and investment needs of the customers, top insurance companies have introduced new-age ULIPs with better features, benefits, and returns potential. Many such modern ULIPs are as good as mutual funds in many aspects. Take a look-
- Multiple Funds to Choose From
One of the biggest USPs of mutual funds is that there are many different types of funds to suit every type of investor. There are equity funds, debt funds, hybrid funds, and more. Similarly, some top insurers offer multiple fund options with their ULIPs. So, one gets to purchase life insurance and simultaneously also invest in a fund that matches their risk appetite and financial goals.
- Switching Between Funds
If the market is volatile, you can switch your mutual fund investment between different funds to ensure that your capital remains protected. Even if you believe that you have invested in a fund that is not delivering the expected returns, you can easily switch to a different mutual fund scheme from the same fund house.
You now get this benefit with new-age ULIPs too. Be it market volatility, optimizing returns, or building a diversified portfolio, you can easily switch between different ULIPs funds offered by your insurance provider.
- Easy Online Access
Thanks to digitalization, you can easily track the growth of your mutual fund investment. Fund houses update the NAV of their schemes daily, and the same can be monitored by visiting their official website. You can also invest, switch between funds, and even withdraw your mutual fund investment online.
Life insurance companies that offer modern ULIPs also have their online portals where you can track your investment and make necessary changes if needed. You can also pay policy premiums online, eliminating the traditional need to make payments through an insurance agent. This elimination of mediators has also made ULIPs more affordable.
- Tax Implications
Mutual fund schemes like Equity Linked Savings Scheme (ELSS) is an excellent way to save taxes. These funds are eligible for tax deductions of up to Rs. 1.5 lakhs in a financial year under Section 80C. These funds have a lock-in period of 3 years. The capital gains of above Rs. 1 lakh after 3-years are taxed at the rate of 10%. Gains of up to Rs. 1 lakh are tax-free.
As ULIPs are a type of life insurance product, they too are eligible for deductions of up to Rs. 1.5 lakhs under Section 80C of the IT Act. Moreover, under Section 10 (10D) of the IT Act, the maturity amount that you receive from a ULIP is tax-exempt.
- Partial Withdrawal
In case of any financial emergency, you are free to withdraw your mutual fund investment partially after the lock-in period. The lock-in period is generally 1-year in most close-ended schemes. ELSS has a lock-in period of 3-years.
You get this partial withdrawal flexibility in ULIPs too. After paying ULIP premiums for five years, you can withdraw some amount from the accumulated fund value.
Enjoy a Multitude of Benefits with Modern-Age ULIPs
Apart from providing all the different benefits, just like mutual funds, ULIPs also have an added advantage of life cover. This makes them an excellent choice for any individual wanting to purchase life insurance while also steadily building an investment portfolio.
Look for a reputed life insurance company to browse through their ULIP offerings to get financial security for your loved ones and begin your investment journey.