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ULIP is a Unit-linked Insurance Plan that offers various benefits to the policyholder. The premiums that the policyholder has to pay are divided between investment and insurance purposes. It is up to the policyholder to decide and make the investment that is suitable for them.
There is a decrease in the financial burden that the policyholder has to bear as the premium is divided into several portions. ULIP is an excellent investment as it helps in getting higher returns and helps in meeting major life goals. Here are some ULIP tax benefits:
Benefits of the ULIP plan:
Financial independence:
The best part about investing in a ULIP is that it helps give you the financial independence you need. You can use it for higher education or retirement, which will provide you with the support you need. ULIP comes into play when you do not have a stable source of income, and it helps you make sound investment choices given your financial situation. The ULIP plan helps you have better investments, which can help you build the future you need and reduce the financial burden.
Investment flexibility:
The ULIP is considered one of the most flexible investment tools, allowing policyholders to choose where and how they want to invest. After reviewing the policy’s terms and conditions, the policyholder can decide how they want to switch between funds and where they want to invest. It also allows them to make partial withdrawals when necessary.
Tax benefits:
ULIPs assist policyholders in lowering their tax burden. With ULIPs, you can avail of tax benefits under section 80C on premium payments. You will also receive tax-free returns. Make sure to go through the tax rules before purchasing the plan because it will give you a clear view of how your finances will look with the ULIP plan.
Life cover:
The ULIP benefit includes life insurance, which provides you and your loved ones with a safety net in times of crisis. Your family will be safe even when you are not present, thanks to the plan. The plan ensures that everything your family desires is kept and properly secured. It also aids in the growth of money over time due to better investments.
Top Ups
ULIPs also allows to invest over& above the premiums. These top-ups are usually completely invested in the funds that you chose, giving a boost to your overall investment. Since no component of these top-ups’ amounts is allocated towards providing life cover, there are no charges.
Fund options under the ULIP plan:
Equity funds:
There is a high risk with these ULIPs because you invest in stocks of companies and high-risk equities. Though there is a risk, there is also the chance of getting higher returns.
Cash/Debt funds:
The cash fund ULIP helps investors put money in low-risk markets like bank deposits, money funds, and much more. With the low investment that is made, the return is also low for the investor.
Income and bond funds:
Income and bond funds ULIPs are medium-risk investments for the policyholder. In such ULIPs, investors can invest money in corporate bonds, fixed-income securities, and much more.
Balanced funds:
The balanced funds are balanced investment plans for the policyholders. The money stays stable and is invested in equal proportions in different funds, which makes the risk low. You can choose the ULIP you want to invest in, considering the kind of return and risk you are ready to put in.
Conclusion:
There are several ULIP benefits that the policyholder can get, but it is essential to go through all the terms and conditions before purchasing the plan. You can also invest according to your needs and the kind of returns you want from your investment.
