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How do ULIPs help in creating long-term wealth

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April 15, 2021

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You may have many goals over the course of your life – some may be short-term, like making a premium purchase or taking a family vacation – others may be more futuristic, like building or buying your own house or saving up for your children’s higher education – to achieve these goals, it’s important to invest right, so you can save up for the long term

While we’re on this subject, ULIPs can help you create the long-term wealth needed to meet these goals and more. ULIPs are suited to those who are seeking a long-term strategy to generate capital. This single plan offers the dual benefits of savings and security. Known as Unit Linked Insurance Scheme, ULIP provides both insurance and investment services. It provides a life cover with fair returns, and helps save taxes*. In the todays market situation, ULIPs have become one of the best, most sought after investment options.

How ULIP is a good investment option for long term wealth creation

  1. They have a lock-in period

    ULIP comes with a five-year lock-in period. Since ULIP is a long-term investmentoption, investing in a single ULIP will suffice. Typically, the lock-in period is determined on the basis of the date of the policy issued and the premium amount shall be paid on a monthly or annual basis as a lump sum. Additionally, the policyholder may decide to discontinue the policy after a period of 5 years and withdraw the money as per their need.

  2. They offer better long-term returns

    In comparison to other investment options, ULIPs have a higher chance of making good returns by investing the premium you pay in a variety of asset classes. It also gives an option of opting for a different fund each year, based on its performance.

  3. They give you the flexibility to switch funds

    ULIPs have high flexibility and they give you the option of moving funds during the policy period. As a matter of fact, it is the only investment tool that offers this feature. It helps the insured to transfer their investment sum from one fund to another in whole or in part.You can select all of them according to your needs and the efficiency of your funds. This includes growth, balance, equity and revenue funds. In reality, you can easily make three to four switches per year at no cost. All you need to do is pick a plan, change the distribution of funds, and go with it until the end of your policy, so that you reap long-term benefits.

  4. They have many other beneficial features

    ULIPs also provide for tax incentives as provided for in Section 80C of the Income Tax Act, 1961. The optimal tax-saving alternative depends on a variety of factors, such as lock-in time, maturity benefits and the amount of return. You also have the option of selecting a single premium policy instead of selecting to pay over regular periods of time. If you have some extra money to spare, it can easily be invested in your ULIP policy, and you can expect high returns in the long run.

Conclusion

With so many investment options available on the market, it's hard to pick the one that suits your investment needs. Choose ULIP as your investment tool, as it maintains a perfect balance between offering insurance coverage and producing high returns. In addition, if you're planning to invest in ULIP, select HDFC Click2 Wealth that offers you enough investment options along with additional investment options, loyalty additions^, wealth boosters, etc. 

HDFC Life offers you a range of ULIP items based on your risk appetite and financial objectives - whether for retirement planning, your children's education, or for investment purposes. HDFC Life Click 2 Invest-ULIP is an online ULIP plan# that offers market-linked returns at minimal cost and provides your family with valuable financial security and meets your investment goals.

* The above-mentioned tax rates and tax benefits are subject to changes in tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.

#This is a unit linked plan; the premiums you pay in this plan are subject to investment risks associated with the capital markets. The unit prices of the funds may go up or down, reflecting changes in the capital markets.

^Get 1% of Annualised premium as special additions to your Fund Value for ­rst 5 years1

 

ARN: ED/11/20/21334 

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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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