Unit-Linked Insurance Plan – ULIP investments are among the preferred choices due to the ULIP benefits. However, there are several other investment alternatives like saving plans, mutual funds, and retirement plans apart from the ULIP policy. Undoubtedly, one should understand the policy and only invest in it.

The same you need to follow with the ULIP plans in India. Here in this article, we have mentioned all the details you need to know about ULIP policy, who should invest in ULIP policy, and who should not. Read the article further for better in-depth information about the same.

What Are ULIP Investment Plans?

ULIP investments provide investment and insurance benefits. The investor has to pay a premium for ULIP insurance which is further split into two options – money market instrument investment and life insurance. Furthermore, it provides substantial returns on investment.

The insurer provides all savings per the IRDA-approved insurance plan. There are several ULIP Plans, such as Fortune Pro and Param Rakshak Plus of Tata AIA Life Insurance Policy Plans, that impart several ULIP benefits to the policyholder. Similarly, one can check other insurance service providers too.

Who Should Invest In ULIP Insurance Policies?

There are four fundamental reasons to invest in ULIP insurance. If these reasons are per your requirements, then you should invest in the ULIP policy. These reasons are as follows:

If you want to enjoy life insurance coverage

Generally, we need to be prepared to handle the uncertainties in life. Since a ULIP plan provides life insurance, the beneficiaries are protected even if the policyholder is not there anymore. The sum insured amount can be utilised to cover their financial commitments, such as daily costs, loan repayment, or lifestyle necessities, among other things. If a person wants life insurance coverage, then he or she must invest in a ULIP plan.

If you want to maximise the aggregate return or diversify the investment portfolio

The Unit Linked Investment Plan gives numerous options for investors to invest in, i.e. balanced funds, equity funds or debt funds. Risk tolerance plays an important role here in investing the fund. If the risk-taking capacity is high, then one can consider equity funds. If the risk-taking capacity is moderate, then consider balanced funds.

If the investor is a risk-averse investor, then go for debt funds. Most importantly, in ULIP insurance, the investor can check the market conditions and accordingly switch between funds. This gives a better ROI to the investor.

Get tax benefits

Using such an investment entity, you may be able to lower your tax burden. Premiums paid for ULIPs are tax deductible under Section 80C of the Income Tax Act of 1961. Furthermore, the death benefit provided under such a plan is tax-free.

If you want to have long-term benefits with investment

People prefer to invest in ULIP as they impart long-term benefits to the investors. Investing in a longer-term horizon may attract a premium and result in greater returns if you have a longer time horizon. Funds from this project can go toward various purposes, such as education for your children, a down payment on a home, or retirement preparations.

Conclusion

These are some of the reasons why you must invest in ULIP insurance. If you have such reasons behind investing, you must invest in the ULIP investment. You may have ULIPs in your investment portfolio because they strike a good mix between providing insurance coverage and increasing your earnings. With this investment, you can achieve your long-term financial goals and ensure financial stability for your entire family.