How ULIPs Protect Your Family’s Goals and Future?

2025-10-08

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Life uncertainties remind you that smart investment is a necessity. You work hard every day to secure your future, but without the right financial plan, your family's dreams may remain vulnerable. A Unit-Linked Insurance Plan (ULIP) prepares you for uncertainties by offering both life cover and market-linked wealth creation in one solution.

When you choose a ULIP, you enjoy the dual benefit of life protection and wealth creation. In this comprehensive guide, you will understand what a ULIP is, how it works, and the role it plays in safeguarding your family’s financial future. By the end, you will get a clear perspective on adding a ULIP to your financial portfolio.

Key Takeaways

ULIPs combine investment and insurance in one plan, giving both protection and growth
You can switch funds anytime to adapt to changing goals or market conditions
Partial withdrawals are possible after 5 years, offering flexibility
Some ULIPs include premium protection to safeguard your family’s goals
ULIPs qualify for tax benefits under Sections 80C and 10(10D)

Understanding Unit-Linked Insurance Plan (ULIP)

ULIP is a financial product that offers the combined benefit of insurance and investment. Over the years, it has become a popular financial instrument among first-time investors. It allows you to invest in equity, debt or a mix of both while also providing life insurance coverage. The premium you pay is divided into two portions: one portion goes towards insurance, and the other portion goes towards market-linked investments.

Key Features of ULIP Plan:

ULIPs are designed to adapt to your changing needs while growing your wealth steadily. Let’s explore the features that give these plans a unique edge.

Investment Allocation: With ULIPs, you have complete control over where your money goes. You can invest in equity funds for higher growth, debt funds for stability, or balanced funds for a mix of both. When you start investing, you can redirect your future premiums to different funds based on your risk appetite.

Fund Switch: ULIPs give you the flexibility to switch between funds as per your requirements. If market conditions shift or your financial goals change, you can move from equity to debt funds or vice versa. This feature helps you protect your investments during downturns and capitalise on market upswings.

Partial Withdrawal: After the five-year lock-in period, you can withdraw a portion of your funds in case of emergencies. This ensures a safety net during the emergency period.

Top-ups: As your financial needs grow, you can increase your investment by adding top-ups to your ULIP. This extra contribution boosts your fund value and helps you build a larger corpus by the end of the policy term.

Tax-saving Instrument: ULIPs double up as a tax-efficient investment. You can claim tax deductions of up to ₹1.5 lakh per year on premiums under Section 80C of the Income Tax Act, 1961. Plus, the maturity benefits you receive are taxable under capital gains heads

Multiple Premium Payment Options: ULIPs allow you to pay premiums on a monthly, half-yearly, or annual basis. You can also opt for a single premium payment if you prefer regular instalments. This flexibility ensures that your investment stays convenient and manageable for a long period.

How ULIPs Safeguard Your Family Goals?

ULIPs are investment tools that are designed to secure your family’s future while helping you achieve long-term goals. Along with wealth creation, these plans ensure that your loved ones remain financially protected even in your absence. Below are some ways in which ULIPs safeguard your family’s goals.

Life Cover Protection

One of the strongest safeguards ULIPs provide is the life cover component. In your absence, your family will receive a guaranteed sum assured, regardless of market performance. The life cover acts as a financial shield, providing your loved ones with the resources to manage day-to-day expenses and maintain long-term financial stability.

Wealth Creation Through Market-linked Growth

ULIPs also help you build wealth over the long term by investing in market-linked funds. You can choose equity funds for higher growth, debt funds for safety, or hybrid funds for balancing. Over time, these funds, compounding your returns, make it easier to achieve financial goals like your child’s education, retirement, or buying a home.

Goal Protection Option in ULIPs

A unique feature of ULIPs is the goal protection option. If you opt for this, and something happens to you during the policy term, you will not only receive the sum assured to your family but also continue to pay the remaining premiums on your behalf. These premiums are then invested in the chosen funds as per your planned goals, such as children’s education or retirement corpus.

Transparency and Control

Transparency is another safeguard built into ULIPs. You receive regular updates on your fund value and can monitor how your money is performing. This helps your family to track where the money is invested and how it is growing.

Turn Small Investments Into Big Wealth with ULIP

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Factors To Consider Before Choosing ULIPs

When evaluating a ULIP, it’s important to look beyond the surface and assess how well the plan aligns with your financial goals. Below are some factors you must consider when making the call.

Returns from ULIP Investment:

Returns play a big role in choosing the ULIPs. You will get the benefits based on

Market performance: Since ULIPs invest in market-linked funds, your returns rise or fall with market conditions. For instance, equity funds offer high growth but also come with higher risk
Type of fund: You can pick equity, debt, or balanced funds based on your risk appetite.
Investment Duration: Staying invested for the long term lets compounding work in your favour
Switching options: ULIPs let you switch funds to take advantage of changing market trends

Charges in ULIPs:

Before you invest, you should understand the charges that impact your returns. Common charges include:

Premium allocation charge: Deducted upfront to cover initial costs before the rest is invested
Policy administration charge: A fee for maintaining your policy
Fund management charge: Deducted for managing your chosen funds
Mortality charge: Cost of life cover, based on your age and sum assured

Cost of Switching Between Funds:

ULIPs give you the flexibility to switch between equity and debt funds. Most of the plans allow a limited number of free switches per year, and beyond that, a nominal fee applies. This feature helps you align your investment with market movements or your changing financial goals.

Flexibility of Partial Withdrawals:

ULIPs come with a five-year lock-in period, after which you can make partial withdrawals. These withdrawals are especially useful during emergencies such as medical expenses or educational needs. Most policies set minimum and maximum withdrawal amounts that help you get liquidity without disturbing your long-term wealth creation.

Did You Know?

Starting April 1, 2026, any ULIP policy with annual premiums over ₹2.5 lakh will be subject to tax on the returns earned.

Source: Upstox

Promise4Growth Plus is a flexible savings-cum-insurance plan. You get the dual benefit of life cover along with market-linked growth. You can opt for variants like Promise4Wealth Plus, Promise4Care Plus, or Promise4Life Plus as per your planned goals. Some of the key features of this plan are as follows :

Premium Funding Benefit ( PFB): The Premium Funding Benefit (PFB) is the critical guarantee that the plan offers. If you pass away during the policy term, we will take care of all future premium payments. The savings contributions and fund allocation remain the same, so your goals, such as your child’s education or your spouse’s retirement, stay on track.
Loyalty Additions & Wealth Boosters: The plan gives extra units at specific milestones (loyalty additions from the 5th year and every 5th year afterwards; wealth boosters based on average fund value) to augment your fund growth.
Return of Mortality Charges: Mortality charges deducted during your policy term get added back to your fund value at maturity.

Final Thoughts

Financial planning is all about creating a strategy that balances protection and growth. Unit-Linked Insurance Plans (ULIPs) offer this balance by providing life cover along with investment opportunities in equity, debt, or hybrid funds. Their flexibility, tax efficiency, and transparency make them a reliable option for securing family goals while building wealth.

For those seeking a comprehensive solution, our Promise4Growth Plus plan could be a smart choice. It comes with the unique Premium Funding Benefit, which ensures that your family’s financial plans stay on track even in your absence. The plan also offers wealth boosters, loyalty additions, and multiple fund choices to align with your risk appetite and goals.

Glossary

Mortality Charges: The cost deducted by the insurer in a ULIP to provide life cover based on certain factors
Premium: The fixed amount you regularly pay to keep your insurance policy active and enjoy its benefits
Lock-in Period: The minimum time during which you cannot withdraw money from your ULIP investment, usually five years
Sum Assured: The guaranteed amount your nominee receives in case of your unfortunate demise during the policy term
Equity: Shares of companies you invest in, offering high growth potential but with higher market risk

FAQs

ULIPs come with a minimum lock-in period of five years. During this time, you cannot withdraw your funds. This ensures discipline in long-term investing while growing your wealth.

Yes, ULIPs allow you to switch between equity, debt, or balanced funds depending on market conditions or your changing financial goals. Most plans offer a certain number of free switches per year.

No, ULIP returns are not guaranteed as they depend on the performance of the underlying funds. However, the life cover component remains assured, ensuring financial protection for your family.

Premiums paid toward ULIPs qualify for tax deductions under Section 80C of the Income Tax Act, 1961. Additionally, the maturity proceeds are tax-free under Section 10(10D), subject to certain conditions.

Yes, partial withdrawals are allowed after the five-year lock-in period. This feature provides liquidity during emergencies like medical expenses or education needs, while your remaining investment continues to grow.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.

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Canara HSBC Life Insurance offers online ULIP plans that blend life insurance protection with investment growth, helping you build wealth while securing your family's future.