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Top 5 Benefits Of Unit Linked Insurance Plans (ULIP)

Updated on: 22 July,2020 03:02 PM IST  |  Mumbai
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While its not possible to control what happens in the future, there are certain steps you can take to secure it, to whatever extent possible

Top 5 Benefits Of Unit Linked Insurance Plans (ULIP)

We’re currently entangled in a running battle against the COVID-19 pandemic, which has led to almost 11.8 million confirmed cases and approximately 544,000 deaths worldwide, as of July 8, 2020 [1]. These unprecedented times have brought to light just how unpredictable our life is. This is why it’s critical that one always stays prepared to tackle the future uncertainties and challenges of life. While it’s not possible to control what happens in the future, there are certain steps you can take to secure it, to whatever extent possible.

For instance, you can start with setting financial goals for yourself that will motivate you to start saving some money away for the future. To start saving money, you can take the investment route where you invest your money in a feasible financial instrument. To ensure the financial security of the family in the future, you may go for a life insurance policy. Life insurance policies come with many benefits and can help ensure that your family is able to maintain their normal lifestyle in case of any unfortunate incident.

An even better option could be to go for both life insurance and investment instrument to not only secure your financial future but also achieve your dream goals. Now, you can deal with investments and life insurance separately, but there are also products like ULIPs or Unit Linked Insurance Plans that serve the dual purpose of having one plan for future savings while also providing a life cover. It is a life insurance plan that you should definitely consider, in an effort to have a comfortable financial future.

How To Choose The Right ULIP Plan?

One can choose their funds under a ULIP plan depending on their long-term financial goals and allocate the money in equity and/or debt ULIP funds accordingly. Now, there is a slew of these types of life insurance plans from different insurance companies in the market, but one should go for one that offers maximum choices, competitive returns, and dedicated customer care service.

 Bajaj Allianz Life, one of the leading private life insurance companies in India offers a bunch of different ULIP investment plans (both offline and online) to choose from. These plans include online options like Bajaj Allianz Life Goal Assure, Bajaj Allianz Future Gain, Bajaj Allianz Fortune Gain and Bajaj Allianz Life LongLife Goal which are also available offline. And products available on offline channel like Bajaj Allianz Life Future Wealth Gain, Bajaj Allianz Life Goal Based Saving and Bajaj Allianz Life Principal Gain among others. Not to forget, Bajaj Allianz Life insurance company has a claim settlement ratio of 98.02%* and a dedicated customer care service. ULIP, as an investment plan, comes packed with many benefits to protect your family’s future from unforeseen situations and helps you achieve your life goals.

Let’s take a look at some ULIP benefits

1. Long Term Wealth Creation

One of the benefits of a ULIP is that it helps you achieve your long-term goals by generating market-linked returns via equity investments and debt assets. So, be it buying a new house, a car, saving money for higher education for your child, going on vacations, or even starting your own business, ULIP can be a preferred option to save money. Also, it has a five-year lock-in period where one can benefit greatly through the power of compounding that can significantly grow your funds and generate optimum returns when compared to saving money without any investments. This helps people cultivate the habit of a disciplined and systematic way of saving money, which in turn, allows them to fulfil their long-term goals.

2. Income Tax Benefits

Another benefit of ULIPs is that it lets you save tax. It includes ULIP tax benefits under section 80C of the Income Tax Act, 1961. The maturity and death benefit amount is exempted from Income Tax under Section 10(10D) of the Income Tax Act, 1961. The above-mentioned tax benefits are subject to the provision stated in the Income Tax Act, 1961, as amended from time to time. In fact, as per the 2018 Union budget, ULIPs are the only equity-linked investment options exempted from Long-Term Capital Gain (LTCG) Tax. You can enjoy these benefits when paying a premium, at maturity, and even during withdrawal of returns.

3. Market-Linked Returns

With ULIPs, you can choose from a slew of different market-linked funds like equity, debt, etc. all available under one ULIP policy to get maximum return. This further allows you to make a wise investment choice based on your risk appetite. Investing in debt funds is suggested for people seeking low-risk and equity funds are for people with a high-risk appetite. You can also refer to past fund performance and ratings of different funds to make better investment decisions.

4. Life Cover Benefits

As mentioned earlier, ULIP also provides life insurance cover to the policyholder along with investment benefit. This is great since you can protect your family from untoward situations in the future. The benefits of life cover ensure that your family is able to maintain its standard of living and manage expenses without any financial burden even in your absence.

5. Easily Switch Between Funds

ULIPs give you the flexibility to switch your investments from equity to debt and vice versa based on your changing risk appetite and the market outlook. This is great for times when you may want to adjust your ULIP portfolio based on market conditions. For example, for times when the market performance is down, you can switch to debt funds to protect capital and then switch back to equity funds when the markets are on their way up. This can help you optimize your ULIP returns.

Summing it up, ULIPs let you hit two birds with one stone! The dual-purpose policy ensures that you are able to achieve your financial goals while also securing the life and future of your loved ones. A ULIP policy like the one by Bajaj Allianz Life is one such option since it offers a multitude of benefits.

Source: [1] IN&mid=/m/02j71&gl=IN&ceid=IN:en (8th Jul 2020)* Individual Claim Settlement Ratio FY 2019-20

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