COVID-19 has claimed over 40 lakh lives and infected crores. The two aspects of life, physical and financial health are everyone’s top priority. The deadly waves of the coronavirus pandemic that shook the world have reinforced this notion in the last one and a half years.
Thus, saving money for long-term wealth should become your priority. But, where to put this money?
You have multiple investment options if you want to invest for the long term in India. However, rarely anything beats a ULIP as a long-term investment option. ULIP stands for Unit Linked Insurance Plan. It is a type of life insurance that combines growth and safety in a single plan. A ULIP investment plan allows you to build wealth over a long period while also adding to your family’s long-term financial security.
ULIPs allow you to invest in multiple equities and debt funds at the same time with a single investment. At the same time, you also have the opportunity to receive added bonuses for investing over a long period, say more than five years.
Additionally, ULIP investment gives you the option to protect your goal from your sudden demise.
Why ULIP is a Good Investment During Covid-19?
So now that you have looked upon what actually is a ULIP and how it can help, here is why this policy stands tall and holds its ground in this situation of a pandemic or not.
1. It Covers Life Insurance
Part of the premium given in the ULIP goes for the life insurance cover that is the ULIP involves death benefit. The nominee will get the sum assured if the holder dies within the term. The amount is generally 105% of the annual premium amount paid by the insured. Since now Covid-19 is also included in life insurance, live coverage’s significance cannot be understated.
2. Reduces Your Tax Burden
Taxes and inflation are the two factors eating up the value of your wealth. While ULIP provide growth to your fund to beat inflation, they also provide it tax-free. You can claim a deduction of up to Rs 1.5 lakhs from your taxable income every year if you are investing as much in ULIPs. Also, any withdrawals from the plan after five years are exempt from tax.
3. Use as A Retirement Plan
ULIPs are a great long-term investment plan. The longer you stay invested the more fund growth you can enjoy. Thus, ULIPs also make great retirement investment plans. ULIPs like Invest 4G from Canara HSBC and Oriental Bank of Commerce life insurance, offer Century Option for such investment.
Under the Century option, you can continue the ULIP plan till 100 years of age. So, if you start at 30, and invest till 60, you can retire with a well-endowed corpus in 30 years. After 60 starts withdrawing the part of the corpus as a pension income. Coming from a ULIP this withdrawal will be completely tax-free.
4. Provide Flexibility
ULIP does not follow a one-size-fits-all approach. They provide users with a high level of customization and flexibility. You can choose to invest in debt, equity or hybrid funds in a ratio of your preference. Not only this, but you can also change the allocation ratios and switch between funds during the policy term. So, when you face a situation like Covid-19, you can safeguard your funds by switching to safer fund options.
5. Automated Portfolio Management
Discipline is an important factor in wealth generation, and ULIP provide you with ample features to build a disciplined investment approach. Automated portfolio management strategies help you keep your funds disciplined in the ULIP even when you are not looking. These strategies will automatically adjust your portfolio as per the market performance and keep the portfolio risk low.
Learn these 4 go-to ways of portfolio management in ULIPs.
Who Should Buy the ULIP?
You can buy a ULIP if you want to invest in an important long-term goal of your family, especially the child. You would want to protect your financial goals like child’s higher education and marriage and the retirement corpus for your spouse.
ULIP not only helps you build a strong corpus while you are alive, but it can also protect your family’s goal from the setback of your early death. So, if you are in your 30s and want to save for your child’s future, ULIPs are a good investment option for you.
ULIPs like Invest 4G, from Canara HSBC Oriental Bank of Commerce life insurance, have the option of continuing the plan till the age of 100. Since partial withdrawals from ULIP are tax-exempt after five years, ULIP will be a great option to invest in a tax-free pension.
ULIPs by Canara HSBC Oriental Bank of Commerce Life Insurance
Here are few plans offered by Canara HSBC and Oriental Bank of Commerce life insurance
1. Invest 4G Plan
Invest 4G ULIP from Canara HSBC Oriental Bank of Commerce life insurance, is an online plan. This plan gives you the freedom to customize the portfolio as per your goals and needs.
|Features & Benefits||Description|
|Wealth Boosters||This benefit improves the growth of your fund value by adding bonus units to your portfolio. Wealth boosters offer more growth to long-term investors, especially those staying for more than 10 years.|
|Loyalty Additions||Loyalty additions are another bonus for long-term disciplined investors. These additions improve your fund value under the policy if you stay invested for more than five years.|
|Return of Mortality charges||A mortality charge is a deduction from your ULIP fund value to maintain the life cover under the plan. If you survive the policy term these charges are returned to you as an addition to the maturity value of the plan.|
|Tax savings||This plan can help you save tax up to Rs 46,000 every investment year with section 80C deduction if you fall in the 30% tax bracket|
2. Titanium Plus Plan
Titanium Plus ULIP also offers similar benefits to the Invest 4G ULIP. Except this plan is available through an advisor or point of sale only.
|Features & Benefits||Description|
|Wealth Booster||Wealth boosters add bonus Units to your funds to boost the growth of your portfolio. The longer you continue to invest the more benefit you can collect.|
|Loyalty Additions||This is the additional amount user gets for staying invested. These will give you benefit if you stay invested for at least five years. Again this bonus increases if you stay longer.|
|Partial Withdrawals||This option gives the ability to withdraw a part of the accumulated fund value after five years of the lock-in period. Partial withdrawals after five years are also tax-free.|
So, a ULIP provides a whole lot of benefits. These versatile plans provide a life cover as well as inculcate an investing habit in the user that too as per his/her risk appetite. It is a good all-weather go-to investment choice. If you are looking for an investment in these tough times Policies like Invest 4G and Platinum Plus can offer the growth and safety you need.