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Unit Linked Insurance Plans or ULIPs as they are popularly called are market-linked insurance plans which help you plan for Long Term Savings and financial Protection.
Let's walk through the 6 top features of Unit Linked Insurance Policies which you should explore before making the purchase:
1. Flexible investment options
ULIPs offer a whole host of high, medium and low-risk investment options via different fund available under the same plan. You can choose an appropriate plan according to your risk-taking appetite.
ULIPs provide the flexibility to choose either the sum assured or the premium based on your needs. They also provide the flexibility of increasing your investment portfolio through top-ups to make the most of investment opportunities due to any change in the external environment or your own income flows.
The charge structure, value of an investment and expected rate of returns, for the complete tenure of the policy are shared before you buy a product. It's always a good idea to understand the product you would be investing your hard-earned money into.
Similarly, the annual account statement & quarterly investment portfolio along with the daily NAV reporting will ensure that you are aware of the status of your investment portfolio at all times.
3. Liquidity when you need it
In case of any unforeseen future events, ULIPs also let you do a partial withdrawal; wherein after the first 5 years, you can withdraw funds from your Unit Linked Insurance Plans.
4. Disciplined and regular savings
ULIPs help you inculcate a regular saving habit, which goes a long way in building a corpus for future needs.
5. Tax benefits
The premiums paid towards the policy are exempt from tax under section 80C. of income tax Act, 1961.
6. Spread of risk
With ULIPs, you get the benefit of market-linked growth without actually participating in the stock market, not to mention the added benefit of life-cover.