A unit-linked insurance plan (ULIP) offers dual benefits of insurance and investment so you get the best of both worlds. The insurance component offers financial security to your loved ones when you are not around while the investment component allows you to generate wealth along the way. The corpus you build can help meet your long-term financial goals like your child’s education and marriage, buying a dream home, and funding your retirement years. You need to pay the required premium to keep the plan active. In return, you will get regular payouts to fulfil your goals.
Here are the benefits to look for in a robust ULIP in 2023.
Hassle-Free Purchase
You need not show any medical test reports to buy a good market-linked investment plan. The insurance provider only asks for a self-declaration of good health when you buy the plan. Moreover, you can purchase this policy online on the insurer’s website.
Flexibility
The returns on this insurance cum investment plan depend on how well the chosen funds perform. If you are not content with their performance, you can avail the Unit Switch or Premium Re-direction feature of the policy.
A unit switch allows you to shift your accumulated funds partially or entirely among the available fund options. Premium redirection lets you divert your later premiums to a new fund of your choice under the plan.
Various Fund Options
Wealth generation depends on your investment which is further based on your risk profile. A good ULIP allows you to choose from 3 investment options: Enhancer Fund-II, Balanced Fund-II, and Bond Fund-II.
Death Benefit
In the event of your unfortunate death, your nominee will get the fund value or the sum assured whichever is higher. Therefore, the more you invest in the plan, the higher can be the death benefit available to the nominee.
Loyalty Benefits
If the policy has the feature of regular premium payments, you can avail loyalty additions in the ULIP as an advantage. The loyalty benefits would be offered as a portion of your fund value in the last 3 policy years.
Partial Withdrawal Benefit
A good unit-linked insurance plan fulfils your liquidity requirements by letting you make partial withdrawals. For example, after the initial 5 policy years, 4 partial withdrawals are allowed from the accumulated wealth in your fund.
Maturity Benefit
If you survive the plan’s tenure, you will get the loyalty additions over and above the fund value.
Tax Benefit
On buying a ULIP, you qualify for an annual tax deduction, according to the Income Tax Act. The insurer’s representative can tell you more about this.
Easy Eligibility Criteria
A good insurance cum investment plan allows you to invest in it between 18 and 50 years of age. The premium payable is flexible, for instance, ranging from ₹48,000 to ₹5,00,000.
Make sure to choose a reputed insurance provider in India. Pick a suitable plan that meets your risk appetite and investment needs and offers high liquidity and steady growth. Read all the terms and conditions before you start investing.