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Top Reasons Why You Should Invest in ULIPs

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Top Reasons Why You Should Invest in ULIPs
November 08, 2016

You may be on the lookout for avenues to make financial investments. There are numerous financial instruments available in the market, such as mutual funds, insurance plans, and fixed deposits, among others. One of the most popular and reliable wealth creation instruments is a Unit-Linked Insurance Plan (ULIP).

It is a product that offers dual benefits of insurance as well as investment. The premium paid towards such a scheme is divided into two parts-one to offer life coverage and the other goes towards investment in money market instruments. Therefore, investors may invest in such a plan and reap the numerous benefits it has in store.

Following are four primary reasons to purchase a ULIP at the earliest.

1. To maximize your returns

ULIPs offer investors the option to choose from numerous instruments such as debt funds, equity funds, or balanced funds. Based on your risk appetite, you may select one from these options. If you are willing to take a high risk, you may invest in equity, while those with a moderate risk appetite may invest in balanced funds. Similarly, you may invest in debt funds, if you are a risk-averse individual. A great advantage of a ULIP is that you may switch among these funds based on the market outlook. Doing so allows you to obtain a higher return on your invested amount.

2. To enjoy life cover

In case of an unfortunate event of death of the policyholder, the family may face financial difficulties. Since a ULIP offers life cover, one may be assured that the beneficiaries will be looked after even in his/her absence. The sum assured amount may be used to meet their financial obligations, such as daily expenses, repayment of a loan, or meeting their lifestyle needs, among others.

3. To benefit from long-term growth

One of the greatest advantages of investing in a ULIP is its long-term benefits. You may pay premiums for a greater time horizon and enjoy the benefit of long-term growth by investing in the market for a longer tenure to receive higher returns. The accumulated amount may be used to meet specific goals such as your children’s educational expenses, down payment for a home loan, or retirement planning.

4. To enjoy tax benefits

You may reduce your tax liability through such an investment vehicle. Premiums paid towards ULIPs provide tax benefits under Section 80C of the Income Tax Act, 1961. Besides, the death benefit paid under such a scheme is completely tax-free.

With numerous options available in the market, selecting the best investment instrument may become a cumbersome task. You may have ULIP as part of your investment portfolio as it offers a striking balance between providing insurance cover and maximizing your returns. It is indeed a one-stop option for your family’s  financial security and your long-term financial goals.

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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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