What Makes New-Age, Unit Link Insurance Plan’s a Smart Investment Option in the Current Volatile Market?

 

In this policy, the investment risks in the investment portfolio is borne by the policyholder 

The current volatile scenario may discourage many investors from participating in the market. However, if you want to remain invested in the equity segment without taking on the steep risk that comes with direct equity investments, Unit Linked Insurance Plans (ULIPs) may be just the product you are looking for. 

• What are Unit Linked Insurance Plans?

ULIP plans are life insurance plans that combine the benefits of insurance and investment. Over the policy term, you can invest on a monthly, quarterly, half-yearly or on annual basis in your choice of ULIP funds — which could include various options like equity funds, debt funds, hybrid funds and more. 

New-age ULIP policies have emerged as investment options among investors who are keen on tapping into the benefit of market-linked returns while also meeting other financial goals like familial protection, long-term wealth creation and tax savings. 

Reasons New-Age ULIP Policies are a Smart Investment Option

Let’s take a closer look at some key beneficial features that make ULIP plans so popular and essential. 

• Customisable Investment Choices
  

  When you invest in a ULIP plans, you can choose which funds to add to your ULIP portfolio. If you are a conservative investor, you may choose to invest significantly in debt funds and offset this with some equity investments. On the other hand, if you are an aggressive investor, an equity-heavy portfolio may be suitable. 

  What’s more, as your risk profile changes or as the market trends change, you can switch your investments from one fund to another, making your investment choices highly flexible and customisable. 

• Long-Term Investment Option

  ULIP plans also come with a 5-year lock-in period. By remaining invested over this duration, you can ride out short-term market volatility and benefit from potential long-term capital growth. After the lock-in period, although withdrawals are permitted, it is advisable to remain invested over the entire policy term if you want to experience the benefits of your investments in full.

• Tax Savings and Benefits

  ULIPs also offer tax advantages. The premium you pay for your ULIP policy is deductible from your total income up to Rs. 1.5 lakhs per year, under section 80C¹ of the Income Tax Act. Additionally, the maturity payouts and the death benefits received are also tax-free Under Section 10(10D)¹ of Income Tax Act 

• Automated Portfolio Management 

  New-age ULIP plans also give you the benefit of automated portfolio management. You can opt for SIPs to systematically invest in the funds of your choice and even withdraw funds systematically on an automated basis. Other functions like fund rebalancing and risk management are also automated. 

• Regulation of ULIP Charges

  ULIP charges are regulated by the Insurance Regulatory and Development Authority of India (IRDAI). This has proven to be very beneficial for new-age investors, who wish to invest in the markets across changing volatility levels without suffering the burden of high investment costs. 

Conclusion

Tap into the new-age benefits of Unit Linked Insurance Plans and get the dual advantages of investing in the market-linked ULIP funds of your choice as well as obtaining a life cover for your family. What’s more, with the fund switching feature, you can also adjust your portfolio to navigate the effects of market volatility easily.

Related Articles

• ULIP Plan Charges You Must Know
• How to Withdraw ULIP Policy?
• Meaning of Sum Assured in a ULIP
• How to Diversify Your Portfolio: 5 Investment Tips for you.
• Term Insurance For Millennials
• Understand how a ULIP calculator works 

ARN-ED/08/23/4147