The unpredictability of the stock markets makes investments a complex scenario for a majority of investors. In order to battle the fear of market volatility, the insurance companies have introduced the Unit Linked Insurance Plan (ULIP) for the betterment of the investors. Being a market-linked product, it guarantees high ULIP plan returns in order to meet the financial goals of its policyholders.
If you’re wondering how a ULIP investment helps to stay impervious to the fluctuating markets, go through the following guide on a ULIP. Take a look:
Since a ULIP Policy is the combination of investment and insurance, it offers its policyholders with the benefits of growth and protection. Due to its dual functionality, the investors can not only participate in the equity markets but also secure their family in times of financial emergencies. Additionally, life coverage provided by the ULIP Plan ensures the safety of the family members in the long run, even without the absence of the policyholder.
In order to reap maximum benefits from a ULIP investment, it is advisable to look at the past ULIP performance and make an investment in the policy, accordingly. Moreover, staying invested in a ULIP Plan for a longer duration of time allows a higher generation of wealth. The longer the investment, the higher the accumulation of wealth. With the help of a ULIP Policy, the investor can easily obtain higher gains and meet his financial goals with ease.
Why incorporate ULIPs for staying impervious to fluctuating markets:
- It provides multiple options
Since a ULIP investment is for a longer duration of time, the insurance companies let the investors pick the funds as per their need in order to meet their lifelong goals. However, the investors must keep in mind that the selection of fund should be made considering their risk appetite. If a policyholder is a high-risk taker, opt for equity funds, and vice versa.
- It allows switching of funds
A ULIP investment not only offers the investors a choice of multiple funds but also leverages the benefits of an equity market investment through fund switches. When a policyholder invests in a ULIP Plan, he can exit his current fund and opt for another fund depending on his convenience. For instance, if a policyholder has previously opted for an equity fund, he can switch to debt funds if he thinks he cannot handle high risks of an equity fund.
- It offers dual benefits
As mentioned earlier, a ULIP Policy offers its policyholders with dual benefits of growth and protection under one roof. For protection, the nominees are provided with a sum assured amount on the death of the investor. If the investor survives the policy, he is offered with a maturity benefit on the maturity date of his ULIP Policy.
- It guarantees tax deductions
One of the major benefits of investing in a ULIP Policy is the exemption from the payment of taxes. The premiums paid towards the ULIP Policy is deducted up to Rs. 1,50,000 on taxable income as per Section 80C of the Income-tax Act, 1961. Additionally, the maturity benefit is tax-free as stated by Section 10 (10D) of the Income-tax Act, 1961.
Now that you know how to utilize a ULIP Policy in order to battle the market volatility, what are you waiting for? Before an investment in a ULIP, make it point to compare multiple policies in order to land up with the best ULIP Policy at an affordable rate. The right ULIP investment will guarantee maximum benefits for the betterment of the investor and his entire family. In the end, a ULIP investment is absolutely worth all your hard-earned money due to tax savings and high gains.