Unit Linked Insurance Plans - ULIPs

Insurance is a financial product that has quite a few variants depending upon what exactly is being insured and what use will the premium amount be put to. Life insurance plans, health insurance plans, loan insurance plans are some of the most common insurance plans that we come across when we learn about insurance policies. Unit-linked insurance plan is a widely acclaimed investment cum insurance instrument across the globe. Unit-linked insurance plans or ULIPs as they are generally called is an integrated financial product that has features of both insurance as well as investment.

What is a ULIP?

ULIP is a financial instrument that offers customers best of both the insurance and the investment world. ULIPs are provided by insurance companies to customers who want to avail insurance as well as grow their money while at it.

ULIPs offer customers insurance cover as well as a choice to capitalize on various investment tools like stocks, bonds and mutual funds. The double benefit of protection combined with freedom to choose your investment avenue makes ULIPs a truly popular financial instrument among customers.

Features/Benefits – Why ULIPs are the best buy?

ULIPs offer incredible features and benefits to customers and hence are great investment tools especially in today’s fast-paced world where returns matter as much as security. Here are a few highlighting features of unit linked insurance plans that make these instruments stand out among a host of investment options.

Flexibility

ULIP schemes offer flexibility that is not just applicable to one aspect of the policy but is comprehensive in nature. Following are the kinds of flexibility that you get to avail with your Best Ulip Insurance plan schemes.

Life cover can be chosen

Life cover that comes with the insurance part of ULIPs can be chosen by customers depending upon their financial capabilities.

Premium amount can be changed

After a certain period of time, almost all ULIPs provide their customers option to change the premium amount. This amount can either be increased or decreased by customers depending upon their current financial status. Top-up facility is also offered by most ULIP schemes so that customers who want to maximize their gain can invest higher additional amounts whenever they want.

Riders can be opted for

Riders are additional benefits that can be availed by paying a marginally higher premium. Examples of such riders are a critical illness rider, major illness rider etc. ULIPs allow customers to avail additional optional riders for added benefits and enhanced protection.

Fund option can be chosen

ULIPs are insurance policies where a part of your money is put into an investment avenue like mutual funds, stocks, bonds etc. Most insurance providers offer customers the flexibility to choose the fund type in which they want their money to be invested. These funds range from aggressive to conservative variants so as to cater to the need of almost all kinds of customers.

Transparency

Transparency is one of the key features of ULIPs. Unlike other investment tools, ULIPs offer high flexibility to customers and hence they control their ULIP policies to a good extent. Clear benefits and features, illustrative brochures and free-look period make sure that customers are doubly sure before they start investing in their ULIP schemes.

Liquidity

ULIP schemes offer liquidity to customers depending upon the insurance provider from which they have been availed. Most insurance companies offer a lock-in period of 3 or 5 years after which customers are free to make either full or partial withdrawals.

Multiple benefits out of a single scheme

The best feature of ULIPs is that these policies offer not juts insurance benefit but also an avenue for people to grow their money through investment in shares and funds. This investment tool is ideal for customers who have a lower risk appetite but want to grow their money, nonetheless.

Tax Benefits

ULIPs offer not only protection and returns but also tax exemption under section 80C of the Income Tax Act for life insurance and health insurance plans and under section 80D for life insurance and critical illness riders. Also, ULIPs are a great way to save in a disciplined way and to also ensure growth of the saved amount.

Risk mitigation

Since ULIPs invest money in various funds and also offer protection, these products are low-risk investment tools. These policies are great for customers who wish to avail the advantage of market growth without actually participating in the stock market.

Source: https://www.bankbazaar.com/life-insurance/ulip.html