ULIP Returns in 15 Years

 

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

Most young people today want to invest and grow their wealth. We’re sure you have several dreams you’d like to achieve. Smart financial decisions today enable you to meet your goals. A Unit-Linked Insurance Plan (ULIP) helps you invest for the future while protecting your family’s finances in the present. Let’s learn more about ULIPs and how a ULIP investment for 15 years can help you achieve your goals.

What Is a 15-Year ULIP Policy?

A 15-year ULIP lets you invest in various market-linked funds for 15 years while providing you with life coverage. Since ULIPs are insurance plans, you pay a regular premium. You decide whether to pay monthly, quarterly, biannually, or annually. The amount gets split into two parts. A small portion goes towards the insurance company’s charges and provides you with life coverage. The company invests the rest in various market-linked funds. Although the insurance company manages the investment, you can choose the funds based on your risk appetite.

How Does a 15-Year ULIP Policy Work?

A ULIP for 15 years works by offering life insurance coverage for the plan duration. During that time, the policyholder can build wealth by investing in various market-linked debt and equity funds. Investors can choose funds based on their personal risk appetite and financial goals.

Let’s understand this better with an example. 45-year-old Anita wants to build up funds for her retirement. She already has a retirement plan but wants to supplement her income and battle the impact of inflation. Since Anita wants to retire at 60, she chooses a ULIP for 15 years. She pays monthly premiums and decides to invest in more debt funds than equities to safeguard her returns. The life coverage components provide her with peace of mind knowing that her family members will get a significant payout if anything happens to her, helping them maintain their financial stability and standard of living. When Anita retires at 60, the accumulated amount helps her fulfil her retirement goal of travelling.

Why Choose a 15-Year ULIP Policy?

A 15-year ULIP provides several benefits. Let’s learn more.

• Market-linked Returns

  ULIPs allow you to invest in market-linked debt and equity instruments. They could potentially provide high returns, helping you meet your goals.

• Flexibility

  ULIPs provide lots of flexibility. You can choose the sum assured and the investment avenues based on your risk appetite. Most plans today also let you make fund switches to make the most of market fluctuations. Some insurance companies limit the number of changes you can make, so choose a plan accordingly.

• Tax Benefits

  ULIPs offer tax benefits under Section 80C^# and Section 10(10D) of the Income Tax Act. The amount invested enjoys deductions under Section 80C^# of the Income Tax Act, 1961.

  Proceeds received on surrender/partial withdrawal/maturity of ULIP plan are exempt from tax subject to provisions mentioned in Section 10(10D) i.e if the premium payable for any of the years during the policy term does not exceeds 10% of the death sum assured.

  In addition to the above, for policies issued after 1st Feb 2021 tax exemption on maturity proceeds will be available if premium paid in any of the years towards such matured polices does not exceed Rs.2,50,000. Out of the total matured policies in a financial year, exemption u/s 10(10D) will be available only towards those polices who’s aggregate premium in any years does not exceed Rs. 2,50,000/.

  Income from rest of the policies exceeding the mentioned limit will be chargeable as capital gains.

  Death proceeds are also exempt from tax for all ULIP plans.

• Life Coverage

  Your ULIP policy offers life coverage, providing your loved ones with financial security and stability, regardless of what happens to you.

• Long-term Investment

  The longer you stay invested, the more time you have to let your money grow. Your ULIP returns in 15 years will be much better than returns over five or ten years. These long-term investments help you build financial discipline while enabling you to meet your long-term goals.

How Are 15-Year ULIP Policy Return Rates Calculated?

Your 15-year ULIP rate of return depends on how well the funds perform. The fund’s NAV (Net Asset Value) gets calculated daily, and the returns are calculated based on the change in NAV. You can arrive at the NAV by multiplying the fund’s value by the number of units you hold. Market conditions, economic conditions, and fund management can impact your NAV. While calculating returns, you must also factor in the insurance company’s fees. Every ULIP provider charges administration, mortality, and fund management charges, which impact your investment amount.

A 15-year ULIP lets you invest in equity and debt funds while securing your family’s financial future with life insurance coverage. Before investing, assess your risk appetite, investment goals and current financial situation. You can then select a 15-year ULIP that helps you accumulate a corpus to meet your goals.

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ARN - MC/05/23/2054