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How Much Wealth Can I Create From ULIP in 10 years?

How Much Wealth Can I Create From ULIP in 10 years?

A Unit Linked Insurance Plan (ULIP) can help you fulfil a wide slew of long-term investment objectives, be it retirement planning, meeting the cost of your child’s education or wealth and asset creation. The minimum lock-in period of 5 years ensures investor’s discipline along with generating good, market-linked returns. The key highlight of best ULIP is that these provide you with life cover, while a portion of the premium paid is invested in debt, equity or balanced funds. So along with boosting your income and helping you in realising your long-term investment objectives, ULIPs provide financial security to your family, even if you are not around. The dual benefits of both market-linked returns and a life insurance policy have made it among the most popular investment instruments in the market.

Expected wealth generation from ULIPs in 10 years: According to industry experts, you must stay invested in these schemes for a long-term period– typically for 10 years or more. Over a long-term, ULIPs are expected to generate returns ranging from 10% to 12%. The returns from the best ULIP are better than other market instruments like, Equity Linked Savings Schemes (ELSS), fixed deposits and tax-saving funds. ULIPs also provide better returns as compared to government-backed investment instruments, like National Savings Certificate (NSC) and Public Provident Fund (PPF). Inflationary trends can also negatively impact your returns over long-term. The best ULIP, however, can beat inflation.

What makes ULIPs the best investment instrument for wealth generation in 10 years?

The best ULIP are equipped with several key features that will allow you to create wealth over an investment horizon of 10 years or more. These include:

  • Tax Savings: The amount which you received on the maturity of Unit Linked Insurance plans is exempt from taxation under Section 10 D of the Income Tax Act, 1961. Along with this tax relief, you can also avail tax benefits on premium payments. As per section 80 C of the act, premium payment, up to a maximum of Rs 1.5 lakh in a given financial year, is exempt from taxation. Partial withdrawals made without surrendering the whole policy are also tax-free.
  • Fund switching option: Over a 10-year investment horizon, you can receive brisk returns by exercising the option of fund switching in ULIPs. Initially, you can choose to invest in debt, equity or balanced funds. You can then select to rebalance your portfolio in sync with the changes in your risk appetite and investment objectives through the option of fund switching. You can also choose to switch funds after considering the performance of ULIP funds. You can choose from a wide variety of fund switching options, like Systematic Transfer Option (STO), Return Protector Option (RTO), Auto Fund Rebalancing (AFR) and Safety Switch Option (SSO).
  • Triple benefits of investment, savings and a life insurance policy: You can receive brisk, market-linked returns from the best ULIP, while simultaneously providing for the future financial security of your family. As a life insurance policy, ULIPs can provide financial support to your family in the case of any unfortunate eventuality. What’s more, the minimum lock-in period of five years inculcates the habit of savings, which is vital for wealth creation.
  • Flexibility: You can choose from a wide range of ULIPs to suit your individual investment objectives. Alongside, you also have the flexibility to choose your policy term and premium payment term.

Charges on ULIPs: Depending upon your policy, various charges can be levied on ULIPs. These include administrative charges, fund management charges, switch charges, premium allocation charge, partial withdrawal charges and surrender charges. The charges on the best ULIP are, however, transparent.

Conclusion: Thus, you can fulfil your objective of wealth creation over an investment horizon of 10 years by investing in the best ULIP. You can select the Invest 4G plan from Canara HSBC Oriental Bank of Commerce Life Insurance, which allows you to create wealth along with the benefit of providing life cover. The plan is equipped with key benefits, like return of mortality charges, loyalty additions and wealth boosters. You can also choose to receive maturity benefits through the settlement option in instalments or according to the frequency selected by you, over a maximum period of 5 years.

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