Unit-Linked Insurance Plans (ULIP): Top Benefits and Advantages of Investing in ULIP in 2023

You may wonder why you should be investing in ULIPs when you do have other options to choose from. Well, here we would discuss the different ULIP benefits that would make it absolutely worth it.

ULIP is the popular name for unit-linked insurance plans. These are basically insurance plans that are linked to the market. They help you stay protected financially and earn wealth in the long term.

1. They provide you with a lot of flexibility

One of the biggest ULIP plan benefits is that they are among the most flexible investment options that you get out there. This is the first advantage that you get from investing in them. When you invest in ULIPs you get to choose from a wide range of options in terms of risk levels – high, medium, and low. In fact, you would get them in the same plan itself.

So, this way, you can choose a plan that is the most appropriate option given the risk profile that you are comfortable with as an investor. This is one of the principal features of ULIP as such. Over here you can also select the premium rate and the sum assured guaranteed by the policy depending on what you need from the same. Here you also get the option of top-ups that help you increase the amount that you have invested in the same. Thus, you can always make the most of the investment component of these policies whenever you have extra or good income or whenever the external situation changes as such.

Thanks to the flexibility of choosing your fund in these plans you can choose any one depending on the kind of returns that you are looking for in the future. In fact, depending on various circumstances you can move your investments as well so that you can earn the highest possible returns in these cases.

So, combined with the tax benefit on ULIP this helps you build up quite a lot of money for the future as well. Here you can also change your life cover at any time in the policy as per your convenience. This way, you can get the money that you need to protect your life goals and achieve them later on in life. This includes major life events such as childbirth and marriage, to name a few. They also offer you the freedom of selecting riders to improve the coverage that you are getting from such a policy.

As you would know riders are optional extras that help you improve your insurance coverage. So, when you think of the tax benefits of ULIP these policies are almost too good to be true, are they not? The rider that most people opt for in these cases is the accident and disability benefit rider. This rider makes sure that the policy continues to insure your life even if you become disabled because of an accident.

2. They are transparent

No matter which insurer you buy these from they always share various details of the policy such as the fee structure, the rate of returns that you can expect in these cases, and the value of your investment.

So, when you think of the advantages of ULIP this one ranks right up there with the very best of them. You get to know these things before you sign on the dotted line. This is a good thing because you should always know what you are getting into when you are investing your hard-earned money into something. These policies also provide you with the likes of the quarterly investment portfolio and yearly account statement. Plus, you get the daily NAV (net asset value) in these policies. This makes sure that you have complete information about how well your investment is doing in the market.

These policies offer you benefit illustration, which is basically your right as a consumer of financial services such as these. Thanks to the sales benefit illustration you can understand why the policy charges what it does including the premium.

This also sheds light on the returns that you can expect from such a policy based on the premium that you are paying for the same as well as the sum assured that you have chosen. So, this is definitely one of the biggest advantages of ULIP. Along with this you also get key documents such as product brochures. The importance of sales benefit illustrations cannot be ignored especially when it comes to explaining the quantifiable areas of these policies but you also have to understand the other benefits and features of these policies, and this is where these documents come in handy.

Also Read: Beginner’s Guide to ULIPs and Their Benefits

3. They provide you with liquidity at the time when you need the same

When you think of the advantages of a unit-linked insurance plan this is a highly important one for sure. This helps you immensely in case of emergencies. However, you are only allowed partial withdrawal in these cases. However, after the initial lock-in period of five years, you can withdraw money from these plans without any restriction at all.

4. They inculcate the habit of disciplined and regular savings in you

When you invest in ULIPs you get into a habit of saving money consistently.

So, this is a rather handy benefit to have as this is how you can build a corpus that comes in handy in the future.

5. They offer tax benefits

The ULIP tax benefit is a major reason why so many people invest in the same. As per Section 80C of the Income Tax Act, 1961 the premiums that you pay for such a policy are exempted from taxation.

6. They spread the risk

This is related to the investment component of these policies. When you invest in ULIPs you are not actually taking part in the stock market per se.

However, you still get the benefit of the same thanks to the way these policies are structured. Apart from that you also have the benefit of life cover. So, as you can see for yourself, there are almost no disadvantages of ULIP.

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