In an age with a dearth of government jobs catering to your retirement, you will be in for a rude shock if you don’t invest money properly during your tenure. Inflation should be factored in while planning your retirement corpus. Also, keeping all eggs in the same basket is not recommended. Taking an insurance policy is recommended as, during tough times, this money comes in handy. With so many options available for investment and insurance, people are often confused as to which is best for them?
Unit Linked Insurance Plan (ULIP)
ULIP is an excellent option for people to invest their money, providing the best insurance and investment. You can regularly invest small amounts of cash in ULIPs, and the company divides them to invest in equity or debt funds and life insurance. In this manner, you get both benefits without shelling out extra money! ULIPs have emerged as one of the safest and smartest long-term investment plans for people of all ages. They allow you to create wealth while also catering to insurance coverage.
Things to Remember Whcoveragenvesting in ULIP
While ULIP helps kill two birds with one stone, there are a few things to remember while investing your hard-earned money in it:
- As per IRDAI (India’s Insurance Regulatory and Development Authority), the lock-in period for insurance is now 5 years. However, to get maximum benefits from ULIP insurance coverage, you must hold the insurance policy for 10-15 years.
- Fund managers deal with investment for the clients. However, you can switch your investment portfolio between debt and equity funds if you have knowledge of market trends.
- Realize your ultimate goal for investing in a ULIP and make sure you choose the correct ULIP option after comparing it with different plans, risk factors, and the lock-in period.
Benefits and Returns
Apart from being a part of your retirement amount, investing in ULIP can also be used for your child’s education and wealth creation, and policy benefits for the family in case of untimely death. Other benefits that ULIP brings on board include –
1. Tax Benefits
Any premium paid on ULIP (maximum 1.5 lakh per year) is exempted under Section 80C of the Income Tax Act 1961. Additionally, the amount received on maturity is exempted from any tax under Section 10(10D).
2. Accomplish Financial Long Term Goals
You can invest in ULIPs to build good capital for long-term financial goals like child education/marriage or retirement plans. Compared to fixed deposits, ULIPs offer a better rate of interest.
3. Life Cover
Life coverage and accidental Coverage are available when investing in ULIP. A personal accidental cover of up to Rs. 50,000 irrespective of the target amount and a lifetime investment cover of a maximum of Rs. 15 lakh is provided to investors’ next of kin.
4. Cost-Effective Flexible Investment Option
With several free switches available, you can switch between debt & equity funds to generate better returns on your portfolio. While debt instruments lend stability, equity investments help in providing market-related returns.
