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 Protection.
Let's walk through the 6 top features of Unit Linked Insurance Policies which you should explore before making the purchase:
ULIPs offer a whole host of high, medium and low risk investment options under the same policy. You can choose an appropriate policy according to your risk taking appetite. The policies also let you switch between fund options without any additional expense for upto 12 switches in a year.
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 external environment or your own income flows.
The charge structure, value of 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.
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 account.
ULIPs help you inculcate a regular saving habit, which goes a long way in building a corpus for future needs.
The premiums paid towards the policy are exempt from tax under section 80C.
With ULIPs, you get the benefit of market linked growth without actually participating in the stock market, not to mention the added benefit of risk-cover. You are provided a dedicated fund manager who will track your investments while at the same time you would have the flexibility to change your funds as you progress with the plan.