Overview:
Unit linked insurance plan India are beneficially-designed long term investment plans which off both – investment component and protection component through insurance. Both the purposes can be solved as a part of the premium investment by the investor is invested in insurance which protects the financial needs of the applicant’s family in case of his death; the other part is invested in the market linked equities or debt funds which help to resolve future financial needs like retirement, children’s education or marriage, medical contingencies, etc.
The investor does not have to go through the hassle of managing these funds as a fund manager is allocated to him to track the status of his invested funds. These funds are most popular as it gives the flexibility to the investor to switch funds between equity and debt as per his risk appetite and his knowledge of market factors.
Although the introduced lock-in period as introduced by IRDA is from 3 to 5 years, but avail the benefits of insurance, it is better to go for 10-15 years.
Why Invest In Ulip:
Considering personal financial goals, risk factors, a thorough comparison between various ULIPs available in the market, investment horizon, and individual futuristic needs, one should decide how much he can invest in ULIPs and what kind of risk he can take. He also needs to consider what kind of ULIP, he should invest in as there is a variety available in the market like equity funds, balanced funds, and debt funds. Investing in Unit linked insurance plan India can be highly beneficial for the investor on the following grounds:
Insurance plus Investment benefit – It has a dual advantage of long-term investment and protection (insurance)
Long-term financial goals – Investment is made taking long-term financial goals in view, so these investments should have a higher lock-in period to reap maximum benefits which can be used for meeting futuristic goals.
Income Tax Benefits – Tax Benefit under section 80 C and 10(10)D of the Income Tax Act, 1961 can be availed on the proceeds and premium payment of these investments.
Flexibility in investing funds – The investor has a choice of switching his invested funds from one type to another as per his knowledge, taste, and interest.
Evaluation of Risk Factors and enhancing financial stability – The investor also has the leverage to analyze risk factors and ascertain a sure-shot return on investment on the invested funds.
High returns on investment – Since a level of risk is involved and returns are based on the risk taken on these investments, So, the financial benefit arising out of these investments is quite high as compared to many other investment plans in India
Death and Maturity Benefits – On the completion of the tenure, the investor will be rewarded with a corpus that can be used for meeting financial needs in his later years. Inc as the investor dies, the insurance amount will be paid out to the investor’s family to take care of their financial needs in his absence.
Multiple Riders available – There are many add on riders that can be bough side by side and attached to these ULIPs like critical illness and permanent disability rider.
Hassle-free management of investments - a fund manager is allocated to the investor, so even if they are not the market savvy or if they do not have the time to track their investment, the professional agent can do so.
Lock-in Period – As per IRDA, the minimum lock-in period is 3-5 years, but this can be extended by the investor, as the longer their tenure of investment, the better and higher will be the return on investment.
Who Should Invest In Ulip:
Unit linked insurance plans India are beneficial and lucrative to a plethora of investors in the country and are most suitable for people:
People having a varying Risk Appetite – Since these funds are invested in market-linked funds, so a certain amount of risk is attached to these investments. This also means a better and higher return on investment. These risks are handled by a fund manager that is allocated to each investor. So, people who are ready to take the plunge should invest in ULIPs.
People with Long Term investment plans – These investments are not meant for short term goals, instead, long term financial needs like retirement, children marriage or their higher education, medical needs, etc. should be taken into consideration while investing in ULIPs.
Market-Savvy Investors – A slight knowledge of the market funds like equities and debt funds is necessary for the investor to decide where exactly he would like to invest his money in. He has the flexibility to switch his investments. Although he would be supported by a professional agent to guide him, slight knowledge is a must.
Early Investors – People who have just started earning, in their early twenties or thirties should invest in ULIPs to cater to their long-term needs and financial requirements.
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