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Table of Content

 

In this policy, the investment risks in the investment portfolio is borne by the policyholder
 

For beginners, traditional avenues may not suffice due to high inflation. Equities can be risky for new investors. Seek a balanced approach with higher returns and lower risks. Consider ULIPs for long-term growth and family protection. In other words, ULIP investments present a unique blend of high long-term returns, flexible fund allocation, and comprehensive life coverage.

  • What Makes ULIPs the Best Investment Option?

    1. Insurance-Cum-Investment Benefits

ULIP offers insurance with death benefits and market-linked investment on maturity. Premiums are divided between life cover and investment in chosen asset classes.

2. Flexibility 

Your investment goals, risk appetite, and strategy can evolve with time. Similarly, the performance of your selected funds can also change. ULIP investments allow you to accommodate these changes and rebalance your portfolio accordingly. 

3. Varied Investment Options 

While ULIPs are perfect for beginners, they are also ideal for seasoned investors who love the autonomy of frequently shuffling their portfolios. The best ULIP plans offer a range of investment options that align with varied investment goals and risk appetites. 

4. Potentially Higher Returns 

Generally, ULIP investments have a greater potential of yielding higher returns because they allow you to invest in market-linked funds. Moreover, some of the best ULIP plans offer loyalty points and wealth boosters to your corpus just for staying invested for ten years or more. 

5. Multiple Tax Benefits

These plans come with the advantage of tax deduction under Section 80C of the Income Tax Act. The maximum deduction available for premium paid is Rs. 1,50,000 per year subject to conditions specified in the section. 

Proceeds received on surrender/partial withdrawals/maturity of ULIP plan are exempt from tax subject to provisions mentioned in Section 10(10D) i.e if the premium payable for any of the years during the policy term does not exceed 10% of the death sum assured.

In addition to the above, for policies issued after 1st Feb 2021 tax exemption on maturity proceeds will be available only if premium paid in any of the years towards such matured policies does not exceed Rs.2,50,000. Out of the total matured policies in a financial year, exemption u/s 10(10D) will be available only towards those policies who’s aggregate premium in any years does not exceed Rs. 2,50,000/.

Rest policies exceeding the mentioned limit will be chargeable as capital gains.

Death proceeds shall be exempt from tax for all ULIP plans.

6. Easy Liquidity 

Most investment tools don’t allow partial withdrawals from your invested funds. In that case, you might have to use a personal loan or fall back on your rainy day fund to meet expenses in an emergency. However, with ULIP investments, you can partially withdraw your funds after the initial 5-year lock-in period ends. 

  • Who Should Invest In ULIPs?

These myriad benefits make ULIP investments apt for various investor categories. However, to simplify things further, here’s who should invest in ULIPs:

  1. Young adults with lower premium costs and longer investment horizon

  2. Investors with long-term financial goals (e.g., home buying, retirement)

  3. Active portfolio managers who frequently switch between funds to adapt to market changes

  • Tips to Keep Handy When Selecting a ULIP Plan

The following tips can help you pick the best ULIP plan:

  1. Check the charges associated with the ULIP plan.

  2. Assess and compare the performance of various ULIP plans before making a choice.

  3. Carefully assess your risk appetite and investment goals before allocating funds. 

  4. Understand the lock-in regulations of the plan. 

  5. Review the claim settlement ratio of the insurer you pick. 

ARN - ED/08/23/3654

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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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Disclaimer

  1. The above tax benefits are subject to conditions specified u/s 80C and 10(10D) of the Income tax Act, 1961. Tax Laws are subject to change from time to time.

    The afore stated views are based on the current Income-tax law. Also, the customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law. 

    The Unit Linked Insurance products do not offer any liquidity during the first five years of the contract. The policyholders will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of fifth year.  

    For more details on risk factors, associated terms and conditions and exclusions please read sales brochure carefully before concluding a sale. Unit Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. HDFC Life Insurance Company Limited is only the name of the Insurance Company, The name of the company, name of the contract does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

 

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