Features and advantages of ULIPs

Unit Linked Insurance Plan (ULIP) is among the popular market-linked insurance plans, especially if you aim for a long-term investment. One of the significant reasons ULIPs are so popular is their dual benefits of both insurance and investment.

But this is only one benefit, here are other benefits the ULIP plan offers.

Benefits of ULIP

1. Goal-based investment

You get better returns when you invest in certain financial goals. One of the best benefits of ULIPs is they are designed to address various financial goals of the investors, such as buying a car, house or funding your child's higher education. This helps you build a sizable corpus in a disciplined manner.

2. Liquidity

In case of any unforeseen events, you will be able to use your returns from ULIP plans. Once the lock-in period of 5years is over, these plans allow you to withdraw a partial amount from your unit-linked account.

The best part about this is that you won't have to pay tax on the withdrawn amount as the premiums as well as returns from the ULIPs are exempted from the taxable income under the Income Tax Act 1961.

3. Fulfill your debt needs

We often fall short of money when fulfilling our financial goals, be it buying a house or investing in a business. During such times, many resite to applying for a bank loan.

However, if you have invested in a ULIP policy, it will act as a loan for you. Whenever you need a loan against security, you can use ULIPs to a maximum of 50% of the fund value as a loan to fulfill your financial needs.

These benefits of ULIPs make them one of the ideal plans for investors seeking long-term investment along with flexible investment and tax benefits.

Before you decide to invest in the ULIP policy, let's understand its features.

Features of ULIP plans

1. Investment flexibility

When it comes to flexible investment, ULIPs are among the first plans that investors choose. These plans allow you to invest according to your risk appetite. Most ULIP policies invest in a range of debt, equity, and balanced funds. Moreover, it also allows you to switch funds according to your risk appetite and financial goals.

2. Long-term investment

ULIPs serve the best to those who are looking for long-term investments. Staying invested over the long term helps you compensate for the charges deducted and the market fluctuations. Also, as a higher portion of the premium you pay is invested in market-linked plans, it will help you capitalize on higher returns.

3. Tax exemptions

Another reason why ULIPs are popular is that they offer tax benefits. The premiums you pay towards your ULIP plan are exempted from your taxable income. So you can enjoy your returns without worrying about paying taxes over them. This is among the best saving plans you can invest in.

Now that you know the features and benefits of ULIP plans next step is to decide your risk and investment appetite, define your financial goal, and find the right plan to invest in. Then all you have to do is reap the benefits in the future.