ULIPs provide dual benefits—life cover and market-linked investment returns. Hence, they are ideal for long-term wealth creation.
A minimum lock-in period of 5 years encourages disciplined investing and harnesses the power of compounding.
Investors can switch between equity, debt, and balanced funds depending on life stage or risk appetite, offering unmatched flexibility.
ULIPs offer significant tax benefits under Sections 80C and 10(10D), with exemption from LTCG tax (up to the premium threshold).
Choosing a trusted insurer like Canara HSBC Life Insurance ensures access to tailored ULIP options that align with specific financial goals.
Most of us naturally prepare for our future. But life might throw some unannounced, unfortunate events. We can not predict emergencies, but we can certainly prepare for them. A highly recommended financial suggestion is to always secure your future with a trusted, long-term life insurance policy.
Life insurance comes in many forms, through different products in the market. You need to select a plan very wisely. You must look into its benefits in the long run to find out whether it aligns with your needs or not. Overall, an ideal life insurance policy is one that, apart from ample coverage, also provides ample scope for wealth creation.
This is made possible by the means of United Linked Insurance Plans, or ULIPs for short. A ULIP is an insurance product that doubles as an excellent market-linked investment instrument as well. Depending on your choice of ULIP, you can pay your premiums on a monthly or annual basis. While some amount of your premium is contributed towards providing you with insurance coverage, the other part is invested in your investment fund of choice.
These dual benefits make ULIP the prime insurance product of choice for individuals who believe in investing for the long haul. Moreover, since the returns from a ULIP are market-linked, it is more prudent to invest in them for a longer period of time. Apart from this, there are a few more considerations that make ULIP a worthy long-term insurance option.
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ULIP typically comes with a lock-in period of 5 years, during which the policyholder is not allowed any withdrawals or payouts. This serves a very specific purpose, allowing the investment to grow at a higher rate and provide higher returns. It also helps the policyholder in inculcating a disciplined approach to investing.
Particularly, with the power of compounding, investment in the best ULIP can result in substantial returns when compared to not investing the amount at all. Over a long period of time, these returns can even help you achieve financial goals such as purchasing a home or a car. All of this with the added benefit of having a reliable life insurance cover.
When signing up for the long term, it is important to have an investment that can keep up with your ever-changing goals and needs. That is where the flexibility of ULIP comes in handy. In general, the best ULIP offers a variety of fund options to choose from, such as equity, debt and balanced funds. Based on your risk appetite as an investor, you can take your pick and invest accordingly, with the added option of moving your money between these different funds as you see fit. As time progresses, you can change your investment strategy, and your ULIP will be able to support you either way.
Moreover, ULIP also works as a long-term option due to the flexibility it offers with respect to your life insurance cover. You can customise your ULIPand your ideal sum assured at the start of your policy, and with some ULIPs, you even have the option of increasing your sum assured at important milestones in your life.
Apart from this, ULIP also offers a variety of tax deduction benefits. The primary of these is that the premiums contributed to a ULIP are allowed for deduction within ₹1.5 lakh under Section 80C of the Income Tax Act, 1961. Moreover, under Section 10 (10D), the death benefit or maturity amount from a ULIP is tax-free.
ULIPs also have the distinction of being the only market-linked investment tool that is exempted from Long Term Capital Gains, or LTCG taxes. With tax benefits such as these, your ULIP can greatly contribute to your long-term savings. Post the budget announcement in 2021, big-ticket ULIP plans, i.e., plans with a premium exceeding 2.5 lakhs, were no longer tax-free and were subject to a tax rate of 10%. The latest mandate has raised this to 12.5%, which will be applicable from April 1, 2026, onwards.
ULIP maturity benefits are taxed at 10% as LTCG if the annual premium is above ₹2.5 lakh, but death proceeds remain tax-free.
Source: India Today
So, now you know that if you want to truly gain the benefits of a long-term insurance policy, you have to find a reliable insurer. An insurer that offers plans specific to your unique financial goals and risk appetite.
Canara HSBC Life Insurance brings you a wide range of ULIP options, including
Promise4Growth
Alpha Wealth Plan
Wealth Edge Plan
Smart Future Plan
Smart Goals Plan
Grab the right plan, and you can use life insurance for long-term wealth creation and financial protection.
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.
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.
