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Wealth Creation – Unlocking Your Financial Freedom with ULIPs

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Wealth Creation – Unlocking Your Financial Freedom with ULIPs
September 26, 2023

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

In our rapidly evolving world, aspirations and dreams seem endless. We must prioritise securing our financial futures to enjoy independence in our golden years. You might dream of early retirement, hope to own a luxurious house, or aspire to travel the world. Wealth creation enables you to turn your dreams into reality. Let’s better understand the importance of wealth creation and how we can use Unit-Linked Insurance Plans, a powerful financial tool, to achieve our goals.

What Is Wealth Creation?

Wealth creation refers to the process of accumulating assets and other financial resources over several years. It involves intelligent planning, disciplined investment, and wise financial decisions to build a secure and prosperous future. Wealth creation is not limited to the wealthy. It is a goal that everybody can strive towards, regardless of their current financial status.

The Importance of Wealth Creation

Do you often wonder why you should aspire to create wealth? Here’s a look at the importance of building a corpus for the future.

  • Financial Security

    Building wealth provides a safety net during unexpected life events such as medical emergencies or job loss. It ensures that you and your family remain well-protected.

  • Achieving Goals

    Wealth creation helps you achieve your life goals. From buying your dream home to funding your child’s education, you can plan for future finances easily.

  • Retirement Planning

    As you age, wealth creation becomes paramount for a comfortable and stress-free retirement. It allows you to maintain your desired lifestyle during your golden years.

  • Legacy Building

    Creating wealth enables you to leave a lasting legacy for your loved ones. You can pass on the benefits of your hard work and prosperity to future generations.

What Is a Unit-Linked Insurance Plan?

A Unit-Linked Insurance Plan (ULIP) is a unique financial product that combines the benefits of investment and insurance. ULIPs enable you to invest in various market-linked funds, such as equity, debt, or balanced funds. You can choose fund options that work for your risk appetite and goals. Over time, your investment earns market-linked returns that help create a corpus for the future. Additionally, ULIPs provide life insurance coverage, offering financial protection to your loved ones if something happens to you.

Wealth Creation with ULIPs

ULIPs can help you create wealth for the future. Let’s see how.

  • Market-Linked Returns

    ULIPs offer the potential for higher returns compared to traditional insurance policies. The returns depend on market performance, and your investment may be subject to losses. However, staying invested for several years can help mitigate risks and provide significant growth.

  • Investment Flexibility

    With ULIPs, you can switch between funds based on changing market conditions or your evolving financial objectives. The adaptability enables you to align your investment strategy with your risk tolerance and long-term goals.

  • Tax Benefits

    ULIPs offer tax benefits under Section 80C# of the Income Tax Act. Your premiums are eligible for deductions up to INR 1,50,000 per year subject to conditions mentioned therein.

    Proceeds received on surrender/partial withdrawal/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 exceeds 10% of the death sum assured.

    In addition to the above, for policies issued on or after 1st Feb 2021 tax exemption on maturity proceeds will be available if premium paid in any of the years towards such matured polices 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 polices who’s aggregate premium in any years does not exceed Rs. 2,50,000/.

    Income from rest of the policies exceeding the mentioned limit will be chargeable as capital gains.

    Death proceeds are also exempt from tax for all ULIP plans.

  • Life Insurance Coverage

    Along with wealth creation opportunities, ULIPs provide life insurance coverage. The sum assured ensures your family remains financially secure in case of any unfortunate event. The dual benefit of investment and insurance makes ULIPs a compelling choice for many investors.

  • Systematic Investments

    ULIPs promote disciplined investing through regular premium payments. By contributing systematically, you can take advantage of rupee cost averaging, reducing the impact of market volatility on your overall investment.

Wealth creation is the cornerstone of financial well-being and achieving your life’s ambitions. It empowers you to lead a fulfilling life, unburdened by financial stress. Crucially, creating wealth enables you to secure a prosperous future for yourself and your loved ones. ULIPs are a potent wealth creation instrument, combining the benefits of investment growth and life insurance protection. Their market-linked nature, tax advantages, and investment flexibility make them a compelling choice for investors seeking long-term financial growth. The journey towards wealth creation requires patience, discipline, and a well-thought-out strategy. As you embark on this path, consider consulting a financial advisor to tailor your investment plan according to your unique financial goals and risk appetite. Take charge of your financial destiny with ULIPs and watch your wealth grow while safeguarding your loved ones’ future.

Related Articles:

ARN - MC/08/23/3919

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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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Author Profile Written By:
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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We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.

Disclaimer

# The above stated views are based on the current Income-tax law and are subject to conditions specified u/s 80C and u/s 10(10D) of the Income Tax Act, 1961.

# Tax Laws are subject to change from time to time. 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.

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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