Why have savings become an inseparable part of your financial planning? Or, why has it become all the more necessary to save money for the future? Due to the uncertainties and increasing chances of critical illnesses, it is essential to keep yourself and your family financially protected to fight such challenging situations.
To make your financial planning easy, there are a number of investment plans available in the market. However, a few of you might find it difficult to manage the amount for the same out of your monthly income. But, have you ever thought, if something unfortunate happens to you, who will support your family? Therefore, if you cannot manage to invest a higher amount, you can begin investing in a life insurance product like a ULIP Policy.
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Before investing your money, it is advisable to know ‘what is ULIP‘, such that you can make an informed decision and leverage all the benefits of the same. ULIP (Unit Linked Insurance Plan) is a life insurance product with dual benefits, i.e., life coverage and investment benefits from market-linked securities.
Under this, after knowing your specifications and preferences, the insurance provider takes care of your investment. Though, as a policyholder, it is important to be aware of the ongoings, such that you can make changes in the policy whenever required.
Read further to know about the advantages of investing in a ULIP Policy in detail.
1. Triple E-E-E Advantage
If you opt for a ULIP Policy, you can leverage the Triple E-E-E (Exempt-Exempt-Exempt)benefit, i.e. tax benefits on investment, returns and withdrawal. These benefits are covered under two sections of the Income Tax Act, 1961, i.e. Section 80C and Section 10(10D). Therefore, it is a profitable investment option and saves a considerable amount of tax.
2. Top-up advantage
Usually, a ULIP Policy has a top-up advantage. This implies that you can add an amount to the sum assured of your existing policy during the tenure. If the assets are performing reasonably good, you can earn even higher returns. This top-up amount benefits in another way also, i.e., if you want to withdraw an amount for dealing with an emergency, the amount is deducted from the top-up amount, keeping your corpus and insurance coverage safe and intact.
3. Fund Switching Option
Under a ULIP Policy, you get an advantage of earning returns on the market linked assets. Depending on the market conditions, the performance of assets fluctuate over a period of time. While analysing and considering your risk appetite and market conditions, you can switch your amount from one asset to the other during your policy’s tenure, like, from debt to equity or vice versa.
You are allowed to switch your funds for a fixed number of times. If you sign up for one of the best ULIP Policy with a credible insurance provider, their professionals handle the process of investing your money in appropriate market securities to help you earn the maximum returns possible.
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4. Liquidity Benefits
A ULIP policy offers you the benefit of partial withdrawal post the lock-in period, which is usually of 5 years. After this period, if an emergency arises, you can make partial withdrawals to fight contingencies.
Otherwise, you can keep your amount invested for a longer period of time for more benefits. One of the common mistakes committed by people is that they withdraw their amount after 5 years, irrespective of the fact whether they need it or not.
5. Disciplined and Regular Savings
To save a considerable amount for your future, it is essential to inculcate the habit of disciplined and regular savings. If you sign up for a ULIP Policy and pay your premium regularly, you will automatically start saving regularly and have a corpus, to meet the future needs and fight untoward events.
6. Encourages Goal-Based Savings
Most of the people have dreams and goals to accomplish in this lifetime. For this, goal-based savings are preferred to attain the goals in a planned and practical way. After you have figured out your long-term goal, which might include retirement planning, your child’s education, buying a home or car, etc., you can divide and direct your amount towards life coverage and market-linked securities accordingly.
7. Option to Enhance Coverage
Under ULIP, to widen the coverage of your insurance policy, you can opt for rider benefits. These add-ons provide you protection against contingencies like an accident, permanent disability, etc., which are usually not a part of basic term insurance.
Invest Your Financial Savings Today
As a number of investment options are available, you can easily choose one of them based on your financial capacity. Instead of just keeping aside an amount out of your income, it is advisable to invest your savings to buy life cover and create a passive income source. This is important to keep your loved ones financially independent even in your absence.
You should choose one of the credible insurance providers such that you can be worry-free about your investment and stay assured of maximum possible returns. As a part of the basic research about the insurance provider, it is important to read through their customer reviews, check the claim settlement ratio, etc. After that, you are all set to sign up for investing your financial savings and grow your money.