Why Ulip Is The Best Tax Saving Investment

2024-08-02

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With the advent of technology, tax saving has been simplified in many ways and you can buy an insurance online at your ease. Before, buying an insurance make sure that you plan your finances and saving money is the first step towards financial planning. Apart from this, tax saving also plays an important role in meeting short-term and long-term financial goals. It not just reduces the tax liability but also helps in saving for several other goals that one has set at different stages of life. For an effective tax planning, you need to begin your financial planning at the beginning of the financial year.

Unit linked insurance plan, also known as ULIP is considered as one of the best tax-saving options as it provides the dual benefits of both insurance and investment. A small amount of money goes towards your premium while the remaining amount is invested in mutual funds. This plan is an ideal amalgamation of great returns, best protection, and maximum tax savings. It offers tax exemption under Section 80C and Section 10D of the Income Tax Act, 1961. In ULIP, you can get tax benefits at different stages such as while making premium payments, debt or equity switches or availing maturity benefits. In addition to this, death benefits are also tax free under the policy.

ULIPs prove to be an ideal option when it comes to investing for your long-term financial goals which includes child education/marriage, retirement etc. Also, this long-term investment product gives investors the flexibility to switch in accordance to their financial goals.

Besides, a few reasons that shows why ULIPs are one of the best tax saving investment options, take a look -

It helps in goal-centric planning - ULIPs have a minimum lock-in period of 5 years which helps policyholders to do goal-centric financial planning. Thus, one can invest in ULIPs to plan future financial goals such as marriage, child’s education, house purchase, etc. You are allowed to make partial withdrawals only after the end of the lock-in period.
Top-up your investments - ULIPs also allow you to invest surplus cash through top-up. In simple terms, the top-up facility helps policyholders to invest extra money in the policy. And these top-ups are eligible for deduction as well as exemption under section 80C of the Income Tax Act.
Tax-free withdrawals - Death benefits are also available under the policy. ULIPs also offer great tax benefits on withdrawals that can occur in certain cases such as partial withdrawal, maturity of the policy, death of the policyholder. Upon maturity, the policyholder gets an assured benefit which is exempt to tax under section 10D of the Income Tax Act, 1961.
Tax deduction on premium paid - In case of ULIPs, the insured person enjoys the benefit of tax exemption as per Section 80C of the Income Tax Act, 1961 on the amount of premiums paid. This means the premiums paid by you for your ULIP is eligible to tax deduction and this limit goes up to 1.5 Lakh. The money invested in ULIPs is further invested in funds such as equity, debts, and money market instruments.

On the whole, it’s a wise decision to invest in ULIP. As a combination product like ULIP allows you to enjoy several benefits like tax savings, life cover and guaranteed returns with minimum risks. So, if you are planning for an ULIP investment, then choose to go with Canara HSBC Life Insurance as they provide the best ULIP that offers life cover along with additional investment options like terminal illness, accidental/death benefits as per your needs. Invest 4G plan is a comprehensive Unit Linked Insurance Plan that not only offer flexible premium payment option but gives you an option to invest your money in 7 different funds and 4 portfolio strategies at a minimum charge with mortality return benefit.

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.