Candice Dicki
A ULIP plan is a great investment plan for people who prefer to invest in life insurance alongside a safe investment in market securities. They come with several specific benefits for people with a limited investment capacity to save for a major future event.
If you also have similar future goals that you wish to fulfil through an investment plan, a ULIP plan will be the best option. Read on to know more about how they are the perfect investment plans and the several benefits they offer.
Major Benefits of Buying ULIP Plan in India
Although some people might not consider a ULIP plan a worthy investment plan, you cannot question its benefits. These plans with proven records of the highest return on investment in the insurance sector can even surpass the returns of mutual funds.
The high returns of the investment plan are mostly because of the available bonds in it. Based on their personal preferences, the customer can choose which bonds they want to include in their ULIP plan portfolio. An insurance provider usually gives more than six bonds in a ULIP plan, and the policyholder can choose bonds of various risks and returns. They can even invest the entire premium into one bond or distribute the premium into various bonds.
Such freedom allows the customer to create an investment plan of their preference rather than going with the old and boring existing plans. Apart from these, buying ULIP plans have several other benefits. The below-given points describe the five major benefits of investing in ULIP investment plans.
Dynamic Interest Rates
ULIP plans have dynamic interest rates depending on the performance of the product. So, their final interest rate can increase if the product performs well. And the rates can also decrease if it underperforms.
Long Term Investment with High Interest Rates
Like life insurance, ULIP plans are also long-term investments. But considering the high-interest rates not seen in regular life insurance with a money-back policy, the final maturity amount can soar higher. So, even if you invest a small premium amount, you can get higher returns in comparison.
Tax Savings
ULIP plans also come under the Section 80C Income Tax Act relaxation criteria. So, you can claim tax relaxations every year you invest in the ULIP investment plan. The maturity returns other than the profit is also exempt from taxes. And in case the premium amount is less than INR 2,50,000, then the investor does not need to pay any taxes, even on the profit.
Flexible-Premium and Payments
ULIP plans provide a lot of flexibility even in choosing the premium amount and the frequency of payments. Keeping low premiums with a monthly frequency allows you the freedom to invest in the plan without much effect on the current financial situation.
Risk Mitigation
Even though ULIP plans have a dynamic interest rate, most plans provide a lower limit. So, there is a guarantee on the minimum return rate an investor will definitely get at maturity, subject to terms. It helps you mitigate any risks in your investment budget and helps you achieve your financial goals without fail.
Flexibility And Total Control
ULIP plans are one of the most flexible investment plans. They provide good liquidity options, input the investor’s choices, and provide the choice to change the selected bonds. So, an investor has full control over their investment plan, which is not usually seen in insurance.
Knowing these benefits will help you understand the importance of having a ULIP plan as an investment plan for your future requirements. You can secure a high corpus for any of your expected and unexpected monetary requirements through it. Investing in them will mean you will never have to worry about its support for better returns or necessary life coverage.
