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5 Amazing Tips - Achieve Fund Growth through ULIPs

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May 13, 2019

Any unit-linked plan offers market-related benefits for the ultimate garnering of the returns on investment. This means that the benefits that you can garner are dependent on the market-performance of a particular fund-option. In simple terms, ULIPs are Unit Linked Insurance Plans that serve as joint instruments for insurance coverage and investment through a variety of fund options. ULIPs come with a lock-in period of 5 years and therefore, enable financial discipline through regular investments which makes them ideal for long term financial goals. ULIPs also have the feature of permissible switches between various fund options that makes them very flexible and the subscriber gets to choose the fun option as per her/his risk appetite. Besides, investments in a ULIP come with tax benefits under Sections 80C and 10D of the Income Tax Act, 1961 and are also exempt from LTCG taxation.

Unit Linked Insurance Plan offer the feature of fund switches between multiple fund options. This means that the policy holder can switch between fund options depending on how a particular fund is performing at the market. The insurers provide this switch option free of any cost up to a maximum of 10 or even 12 switches. After this, a nominal fee for switching between funds is charged. Therefore, ULIPs are very flexible in terms of the customer's preferences and offer a credible flexibility that allows the policy holder to make informed decisions. These days, owing to the increased customer-focus and the innovative market-practices, various insurers are offering various features that are suited to various customer requirements and needs. Therefore, it is very important to check and make an online comparison of the various plans on offer. This can be easily done by logging on to the official portals of the various insurers and comparing the various plan-features. This will give you a clear idea about the specific advantages and will help you in taking an informed decision.

The premium paid by the customer is diverted into two channels- one part goes for the insurance cover while the other is added to the investment corpus, from a host of options. Besides being flexible in terms of fund options that you get to choose from, ULIPs also provide tax benefits under Section 80Cof the Income Tax Act, 1961.. ULIPs have a lock in period of five years (earlier it was three years) and is suitable for specific financial goals over a period of time. There are tax benefits Tax saving is a very crucial factor for deciding the overall returns from an investment and this is where ULIPs score over various other investment options like Mutual Funds. As mentioned, under Sections 80C and 10D of the Income Tax Act, 1961, the payable premiums and the incurred benefits from investing in ULIPs are eligible for tax-exemption. Furthermore, under Section 80C of the Act, there is a tax deduction of up to an upper capping of Rs. 1.5 Lac on the payable premiums towards a ULIP.

HDFC Life offers HDFC Life Click 2 Wealth a unit linked plan that offers market-linked returns with minimal charges.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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