Building wealth and assets is a crucial part of financial planning. One of the most useful and effective ways to do that is to create a financial investment portfolio that offers you sizable returns after a time in accordance with your selected timeframe and aims. Mutual funds, insurance plans, and other financial tools are well-known possibilities when constructing your financial portfolio. But what if you had an opportunity to make an investment in a product that offers returns on investments and covers you like life insurance?
All About ULIP
ULIPs have become a well-liked financial product in the recent years. We’ll define ULIP in this article and discuss why it’s essential for diversifying and advancing your investing approach. It is an investment with a five-year lock-in period and a premium payout that is divided into two categories. One part of the premium amount is utilized to purchase life insurance coverage. To maximize financial returns, the remaining funds are either invested in debt or equity funds. Depending on your long-term financial objectives, you can increase or decrease the proportion of your ULIP assets that go toward your insurance coverage or your investment portfolio. You will surely benefit financially significantly in both scenarios.
ULIPs can be used by all kinds of people to fulfil a range of financial goals, such as paying for retirement, a child’s wedding, or their education. In addition to providing life insurance cover, ULIPs have the benefit of producing higher returns through market-linked investments. Additionally, the premium paid for the ULIPs is eligible for a tax deduction of 1.5 lakh under Section 80C of the Income Tax Act. All this can be calculated with the help of a return on investment calculator.
Why Should One Invest in ULIP?
Today, investing in ULIP is counted as an important asset for your financial portfolio:
- Flexibility and Fund Switching
You can move your money between various funds, including equities, debt, and balanced funds, based on your risk tolerance and financial goals. If you want to invest with a high level of risk, you can increase your equity fund investment portion. However, if you want to lower your risks, you can always convert your assets into debt or balanced funds.
- Purchase and Renewal Ease
It doesn’t take long to buy a new ULIP plan or renew an existing one. Most of the time, you may purchase your preferred plan online from the comfort of your home. Simply visit the insurance company’s website, choose a plan, send in your KYC paperwork, and complete the purchase.
- Dual Benefits in One Plan
The only special financial product in India that combines investment and life insurance protection into one investment is the ULIP. You won’t need to buy different insurance and investment plans.
- Top Up Easily
You might devote a percentage of your income toward investments as your life develops and you earn more money by using a return-on-investment calculator. A premium top-up option allows you to increase your investment any time, making ULIP in a portfolio a viable choice.
- Compounding’s Mystical Power
All successful ULIP plans use the power of compounding to assist you in increasing your corpus. Your investment in the stock market increases and offers benefits that can aid in overcoming inflation.
- Tax Advantages
ULIPs offer tax advantages as well. Section 80C of the Income Tax Act of 1961 exempts tax payment on premiums up to the limit of INR 1,50,000. Section 10 also exempts the maturity benefit from taxes (10D).
When selecting a policy, your income distribution, risk tolerance, long-term financial objectives, and investment aim must all be taken into account. Consider your financial goals while choosing a strategy, whether they are specific events like a child’s wedding or more nebulous goals like saving money for the future. The best approach helps you accomplish your goal and gets you there with the fewest number of roadblocks and the most return on ULIP investments. Consider the plan’s investment percentage in both equity and debt funds when making your decision. The return-on-investment calculator helps in calculating the overall revenue of the investment. All you have to do to take advantage of long-term capital gains on ULIPs is to stay informed about market conditions, match them with your financial objectives, do your homework, and make the best choice you can.