ULIPs or Unit Linked Insurance Plans are one of the most lucrative investment options available in the financial market. They’re easy enough for the average investor to understand, and they provide a host of benefits to purchasers irrespective of the scale of investment. Before you decide to park your funds in ULIP, you need to understand how they work and why people choose to invest in them. Here’s a closer look at these details.
ULIP are investment options that provide the dual benefit of an insurance cover in combination with capital appreciation. When you invest in ULIPs, you’re required to pay a premium to the financial service provider. This premium is used in two different ways, so you get to enjoy a protective life cover in addition to an opportunity for corpus growth. One part of the premium goes toward funding the insurance cover, while the remaining portion of the premium paid is invested in market-linked instruments.
Depending on the proportion of your investment in the common pool, you’re allocated units. These units have net asset value (NAV) that is calculated on an everyday basis. Since these units are linked to the market, their NAV increases or decreases accordingly. To reduce your risk, you can diversify your ULIP investments, so the average NAV increases in the long run.
The best ULIP offer several advantages to the average investor. With young investors growing increasingly aware of these benefits, ULIP are quickly becoming one of the most preferred choices of investment. Here’s why more people are choosing to invest in the best ULIP offered by financial institutions.
Dual advantage of investment and insurance
ULIPs are the only investment options that offer you the benefits of investment and insurance combined. The insurance portion of the plan offers you a protective life cover. If you outlive the term of the plan, you receive maturity benefits. On the other hand, if you do not survive the plan, your beneficiaries receive death benefits that can help them cope with any financial crises following your demise. In addition to this, the best ULIP also allow your investment to grow over the years, resulting in a sizeable corpus that you can fall back on later in life.
Flexibility of investment
Another reason people choose to invest in the best ULIP is the flexibility they offer. In most other investment options, the money you park is invested in the same vehicle throughout the tenure of investment. In ULIP, however, you have the option to switch between debt, equity, or balanced funds, depending on your risk appetite. You can choose the kind of units you want to purchase right at the start of the investment tenure. Thereafter, depending on changes in the market and variations in your risk exposure, you can transfer your money to other low-risk or high-risk funds as needed.
The best ULIP also offer tax benefits to investors. Since ULIPs are essentially investment products, the premium you pay to invest in these plans is deductible as per section 80C of the Income Tax Act. You can deduct the premium paid during each financial year from your total income for that year, thereby reducing your tax liability. In addition to this, the maturity or death benefits received from the ULIP scheme are also tax-free as per section 10 (10D) of the Income Tax Act. With so many tax benefits to its credit, it’s no wonder that the ULIP scheme is being increasingly preferred by savvy investors.
In addition to these benefits, ULIP also help you save for the long term in a disciplined manner. Canara HSBC Oriental Bank of Commerce offers a variety of ULIP schemes for investors to choose from. Among these are options like the Invest 4G Plan, Titanium Plus Plan, the Smart Future Plan, and the Smart Goals Plan.
The Invest 4G ULIP from Canara HSBC Oriental Bank of Commerce is a particularly excellent investment option for investors. With this plan, you can choose from 7 different funds and 4 portfolio strategies. You also get to enjoy additional benefits such as wealth boosters and loyalty additions. Furthermore, the Invest 4G ULIP also allows you to switch between funds, so you can take advantage of fluctuations in the financial markets.
To pick the best ULIP for your financial goals, all you need to do is take a look at the many online schemes offered by Canara HSBC Oriental Bank of Commerce and choose the one that best aligns with your needs.
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