The 30s are the most financially transforming years of life. Your career is almost set, income is steady and you have learned much about your goals, savings habits and investment needs. This is also that time of life when your family responsibilities are catching up with you and new financial goals are emerging.
This is also the time when you need to seriously consider tax implications of your long-term investments and vice versa. Therefore, here we talk about the right tax-saving plans available for you.
Tax saving is a regular exercise with your tax liability rising every year. Also, it is not something where you want to spend a lot of time every year. So, you need to use tax-saving investments in a way that they continue for a long-period and demand less attention from you.
Fortunately, most tax-saving investments are suitable for long term investment as almost all of them have a lock-in period for withdrawals. Also, the best tax-saving investments will provide the following three exemptions:
Such investments are also called EEE investments, meaning exempt investment, exempt interest and exempt maturity value.
Fortunately, in India, we have several EEE investment options. Each of these investments offers different risk-return profiles and features. Some of the most popular EEE investments are:
As you can see ULIPs is not the only investment with EEE tax status. So, what do ULIPs offer that sets them apart from other equally tax-efficient investments?
Here are the unique aspects of ULIPs which sets them apart:
You can allocate your investment to multiple funds based on your risk appetite and comfort. This feature of ULIP is especially useful when you are investing for more than 10-year period.
You can allocate your funds into equity, debt, liquid and balanced funds. The best part is that allocation to any of these funds or switching between the funds during the policy period does not attract tax liability.
ULIP investment plans offer multiple fund management strategies for you to manage your investment in the plan. You can use these strategies to automate your asset allocation and benefit from the market opportunities.
For example, Canara HSBC OBC Life’s Invest 4G plan offers three strategies to manage your asset allocation during the investment period. A fourth strategy allows you to safeguard your corpus in the plan as you approach maturity.
Automated portfolio management strategies give you better control over your asset allocation without losing the tax-efficiency.
ULIPs are a type of life insurance plans, and insurance means financial stability. On the same principles, Invest 4G ULIP plan protects the financial goal for which you started investing. The plan receives all remaining instalments from the insurer in case of your early demise and the corpus continues to grow.
Your family will receive the maturity value to meet the goal as you originally intended. This feature makes ULIPs like Invest 4G one of the best options to fulfil your child’s education and marriage goals.
Also, if you use ULIP plan to save for your retirement you protect your spouse from inadequate retirement corpus in case of your early demise.
ULIPs are one of the best investments for long-term investors. Investors who regularly invest in ULIP plan for more than five years can receive bonus units. Invest 4G plan from Canara HSBC OBC Life has two such boosters, which enhance your portfolio value over time.
The longer you stay invested in the plan the more benefit you receive from the boosters.
ULIP is a life insurance and thus, it goes without saying that it has a life cover component as well. The life cover works so far as:
If you have opted for the investment to continue as intended after your demise, your family receives the sum assured of the policy as death claim. After the sum assured has been paid out, the investment continues till maturity.
However, if you only chose the death benefit in the plan, ULIP will stop after paying the death benefit to the family.
ULIPs also carry a lock-in period for withdrawals from the plan, like all other tax-saving investments. The lock-in period is of five years in ULIPs. However, the death benefit is still payable.
You can withdraw part of total available funds from the ULIP after the lock-in period is over. So, in a way despite being a long-term investment option, ULIPs give you enough flexibility to use your money.
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