ULIP stands for the unit linked insurance plan. It is a tool generally considered to be great for the wealth creating. It is considered to be good for long terms due to the diversity that is offered in the funds. It is quite ideal for people who want to start at younger age so that they can have the equity advantage in the long run. also the guidelines issued by the New Insurance Regulatory and Development Authority of India, have made these ULIPs even more investor friendly as compared to the time when they were initially introduced.
There is several ways in which the ULIPs can save you from the long term plans. These are as follows-
Lock in period
They come with a five year lock in period which makes you habituated to indiscipline investing. This policy can be bight once and it helps because it is a long term plan. Also with the help of this, one can avail the tax benefits every year till the paying term of the premium ends. Also the lock in is calculated since the day the data policy is issued. One can either choose to pay the premiums on a monthly basis or sometimes annually.
Potentially better return
Also the ULIPs give better returns as compared to any other insurance products. This is due to the equity advantage which is because the ULIPs invest the premium that is used by people in different assists and different funds. The tax savings are taken care of by the renewals. Also depending on the performance of the equity, the maturity amount varies for a given tenure. And also the maturity amount may become at free in cases of tax efficiency.
ULIPs are considered to be very flexible. One is allowed to switch between the funds during the term of the policy. A person also gets to choose between equity, growth, balanced, income etc. they are also allowed to change the fund at any point of time. Also here one deed not need to monitor the companies in which the funds are invested unlike the shares in which it is necessary to keep track of it.
The ULIPs come with dual advantage. They provide unto INR 1.5 lakhs of tax advantage under the section 80 C of the income tax act 1961. And it also offers a minimum amount of sum that can be insured. Its value is equal to near about 10 times of the annual premium for all of those investors who are under the age of 45. And this is not the case with the term insurance plans.
Thus with so many advantages that are being offered by the ULIP, it can act as a great opportunity for the creation of wealth. With the ULIP become more investor friendly more and more people have been taking interest in this in the recent time.