A Unit linked insurance plan allows you to grow your wealth along with a protection cover. ULIPs can be one of the investment schemes that helps in achieving financial goals. Also according to your risk appetite you can choose whether to invest in equity funds or enjoy stable returns and invest in debt funds.
What Are The Benefits Offered In ULIP Plans?
ULIP plans offer both death benefits and maturity benefits on the plan. The death benefits are offered to the nominee in case of an unfortunate demise of the policyholder. The value of the amount is the assured sum in addition to the fund value.
Maturity benefits are offered to the policyholder on surviving the entire tenure. The maturity amount same as the fund value.
However, as per the Death Benefits, ULIPs are classified into two types:
Type 1: Under this plan the nominee gets either the sum assured or the fund value whichever is higher. In case of the policyholder’s early demise in the initial years, the nominee gets the agreed sum.
Type 2: Under this plan the nominee gets the assured sum along with the fund value when the policyholder expires. The insurance company charges a few extra bucks for the added risk in this policy.
Additional benefits that ULIP plans offer:
Along with the death benefits there are other benefits that these plans offer. Such benefits make this plan more viable as compared to any other investment plans. Let’s check out:
Provides Flexibility: This plan provides a lot of flexibility in terms of shifting from one fund to another as per needs. There are few permissible limits of switches that the policyholder gets. Also, if needed the one can withdraw some fund partly and can add extra money to the fund too. Adding extra money can be done by top-ups over the regular premiums.
Good Investment Option For Long Term Goals: ULIPs are one of the choicest investment option as it provides a cushion for any long term goals. One can invest in ULIPs to fulfil long term loans like buying a car or buying a house or funding marriage as they sum multiplies because of compounding.
Creating a Corpus: As ULIPs benefit from investing in market-linked products, they help create a good corpus for the family. This corpus can be used to meet different financial goals of the family and for using it for the child’s future.
Financial Stability Post Retirement: ULIPs do not only help meet the financial goals but can also help in building a corpus for post-retirement days.
Income Tax Benefits: The policyholder can avail tax benefit under Section 80 C on the premiums paid towards the ULIP plans. The maturity amount is also tax exempted under the Section 10(10D) of the Income Tax Act.
Other than the above mentioned benefits of having a ULIP plans one can also partially withdraw the money when in need. However, the withdrawal limit varies from provider to provider. These plans do have exclusions in terms of death caused due to suicide, under the influence of the drug, accident due to alcohol consumption or accident due to racing.