Thursday 25 July 2024
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Here’s why you should invest in ULIPs as soon as possible

Here’s why you should invest in ULIPs as soon as possible

A ULIP, which stands for Unit Linked Insurance Plans, is becoming one of India’s most preferred plans. There are several institutions that offer ULIPs, and one of the best ones out there is the HDFC ULIP Plan. To find out some of the reasons why investing in a ULIP is essential, make sure you read the whole blog.

When you invest in a ULIP, you will be required to pay a premium that is fixed for your opted cover amount. A certain portion of the premium is used to provide you with insurance coverage, whereas the remaining portion is used for investing in equity or any debt instrument.

Making big financial decisions to ensure a financially stable future is essential. ULIPs play a very crucial role in providing the policyholder with a financially comfortable future.

Here are a few reasons why you should opt for a ULIP

  • Flexibility

You will be offered flexibility when choosing the fund you prefer, changing the life cover, or selecting the perfect rider for your policy. It will be your choice to decide where you want to spend your hard-earned money.

In case you change your mind, you will easily be able to switch from one investment plan to a different one. You also get the option to change the investment variant between equities, debts, and balanced fund options.

  • Free-look period

The free-look period is when you, as a policyholder, are offered some days to look at the policy, and in case you are not satisfied with the product/policy, you can opt out of it and get a refund.

Every reputed insurance provider offers a free-look period. The same is the case with ULIPs. Some companies offer a few months’ time to help you decide whether you are happy with the policy. If not, then you get the liberty to cancel your policy.

  • Liquidity

The best feature of a ULIP is that you get the option to partially withdraw money after you have completed the lock-in period, which is 5-years. You can withdraw a certain percentage from the accumulated amount in case of emergencies and other unforeseen events. This will help you stay prepared financially when you need the money urgently. As a policyholder, you can withdraw money whenever you wish to at multiple intervals as per your needs and requirements.

Your long-term financial goal should be kept in mind. To achieve your long-term financial goals, such as paying for your child’s education, buying a house, and more, the professionals recommend that you not take out any amount from your plan unless it’s an emergency.

  • Tax benefits

With the multiple benefits and features of ULIP, another added advantage of this plan is the tax benefits. Under Section 80C of the Income Tax Act, 1961, premiums paid up to rupees 1,50,000 for ULIPs are exempt. Also, under Section 10 (10D) of the 1961 Income Tax Act, the payouts received after the policy maturity are tax exempt.