When it comes to investing your money, the financial tool you choose to direct your savings to is crucial. The lure of higher returns in equity markets also comes with an equally higher risk and is more suited for those with suitable experience. While more traditional investment options might provide safety of capital, but leave much to be desired when it comes to returns.
What if you are on the search for higher returns to help you beat inflation with the safety of income protection? In such a scenario, a ULIP not only lets you grow your money as per the amount of risk that you are comfortable to take, it also provides life insurance benefit till maturity.
This dual benefit investing tool also comes with transparency of various policy charges, flexibility, low-cost structure and tax benefits. So whether you are looking to create wealth for your short-term or long term goals, you can rely on some of the best ULIP in the market to help you achieve your target. Here’s how:
Each ULIP has a compulsory 5 year duration for which you need to stay invested for a minimum. This not only inculcates the discipline of saving regularly but also ensures that you as an investor are in for the long haul and not just for short term gains. This approach also helps you to benefit from the power of compounding. The returns earned on the principal amount are reinvested to generate additional income every year. If you stay invested for 10 to 15 years, you can expect significant wealth generation. Some of the best ULIP have delivered 12 to 15% returns on an average over the last 5 years given their cost-effective structure.
Your capacity to take risks can change over time and so can your expectations of generating returns from your investment. Traditional financial options follow a fixed approach and do not allow for flexibility. However, a ULIP allows you to choose between equity, debt and balanced funds as well as switch comfortably between these without paying any additional charges.
Premium redirection allows you to take advantage of market movements to direct your future premium amount in the funds of your choice. As the policy nears completion, you can move from riskier funds to more conservative ones to prevent erosion of capital and preserve your wealth in order to meet your needs in the future.
Apart from providing life insurance for the policyholder, a unit linked investment plan might also allow you to include your spouse and children as you move through different life stages, providing additional protection to your family. Death benefit is paid out to the nominee should the policyholder be no more when the policy is in force.
Those planning a comfortable retirement, can opt for the whole –life option. It is a good choice as you get a financial safety cushion even as your corpus grows with time. You can also rebalance your portfolio as your age advances by moving to low-risk funds
All the best ULIP fall in the EEE category when it comes to taxation. The premium paid is eligible for deduction for a maximum of Rs 1.5 lakh as per Section 80C subject to certain conditions. The amount on maturity also does not attract tax according to Section 10(10D) of the Income Tax. Not only this, LTCG or capital gains over the long term, which apply on most market-linked instruments are not applicable to ULIPs. All these factors help to reduce your tax outgo considerably so that you save more and can redirect your savings further to grow money.
ULIPs are a lucrative investment option considering all the points mentioned above, that also come with the advantage of life insurance. For instance, the Invest 4G Plan from Canara HSBC Oriental Bank of Commerce Life Insurance allows you to choose from 7 different fund options as per your risk appetite.
You can also opt for either of the four portfolio strategies to get higher returns on your investment. Enjoy loyalty additions and wealth boosters to take your wealth up a notch as you continue to invest for the long term. So embrace the new age ULIP to make your savings work for you and secure your family’s future from any uncertainties.