Due to their capacity to offer market-linked returns as well as security and protection, unit-linked insurance plans, or ULIPs, have traditionally distinguished themselves as a kind of investment. While there are numerous market investment options available to customers, ULIPs continue to stand out because they may provide investment tax benefits, life insurance protection, investment flexibility, and rewards.The top five reasons to buy a ULIP plans right now are listed below.
- ULIPs give you investment flexibility.
Investors can select one of four standard funds in any ULIP. These include cash funds, income/fixed interest/bonds, the balanced fund, and equity funds, the last of which carries the highest level of risk (low risk). Customers can convert their funds from one fund to another and redeem any portion of their assets through ULIPs in the event of an emergency. Most new ULIPs have zero expenses for moving funds and also allow access to about 95% of all funds through partial withdrawal plans.
- ULIPs enable you to take advantage of market volatility.
Investors in ULIP plans have the option of selecting the ideal mix of assets from equities, debt, and mixed that fits their risk tolerance, financial objectives, and income, among other variables. However, another underappreciated benefit of ULIPs is the ability to quickly swap between different funds to profit from market volatility. We are all aware of how unstable and volatile the investment market is owing to the demands of trade wars, elections, and social and political developments, and the only way to protect your assets is to have them invested in a financial instrument that enables you to take advantage of this volatility.
- ULIPs aid in fostering long-term saving behaviors.
The fact that ULIP plans place a strong emphasis on long-term wealth development and support you in achieving it sets them apart from other financial instruments that may encourage short-term saving or investment behaviors. This is because the majority of ULIPs have a five-year lock-in period, which helps investors develop the habit of focusing on long-term objectives. Another added benefit of long-term investing is that since your funds are tied up in the long run, you are more likely to survive any shocks in the market, enabling you to obtain larger returns in the long term as compared to short-term horizon investment products, which are greatly influenced due changes in the market.
- ULIPs provide protection.
Finally, it’s important to remember that a ULIP is fundamentally an insurance policy. They not only give you market-linked returns but also assist in protecting your family’s and loved ones’ financial futures in the terrible event that you are no longer able to care for them.
- ULIPs give you tax advantages.
You can also receive a variety of tax advantages with ULIP plans, which makes them a more and more popular investing option. Because the total guaranteed exceeds ten times the annualised premium, ULIP plans qualify for tax exemption under of the Income Tax Act.