Unit Linked Insurance Plans (ULIPs) are a type of insurance plan, where the returns come in the form of units (similar to mutual funds). As an investor, you buy units from the insurance company, and these units in turn increase or decrease in value depending on the performance of the underlying assets that you have invested in. ULIPs are perhaps one of the most flexible types of plans you can invest in, and their investors enjoy some very unique benefits that are not available to investors of other types of ULIP plan or traditional savings accounts, or investment products. Below are eight such benefits.
Tax Advantage
Unlike other insurance products, ULIP plans have tax advantages which make them a more lucrative proposition for most investors.
The premiums paid by an investor into a ULIP are eligible for deduction from their taxable income under Section 80C. In addition, any sum assured is also exempt from taxation while any investment made in ULIPs can be offset against losses incurred in shares and stock markets.
Fixed Sum Assured
When choosing a ULIP plan, check out how much sum assured it offers. A sum assured is basically how much your policy will pay if you pass away before maturity.
The higher your sum assured, the lower your premium is for life insurance.
So always look for a plan with a higher sum assured and consider adding additional riders to increase coverage. For example, add a critical illness rider to give yourself protection against major ailments like cancer or heart attack.
Unlimited Sum Assured
The sum assured is based on how much money you want to invest in a ULIP.
An unlimited sum assured means that if something really bad happens, and it wipes out your entire life savings, your insurance provider has to give you back all of those assets.
Remember though, if you don’t have any savings yet, there’s no point in buying a policy with a high sum assured because there isn’t any money for it to protect.
10 Year Long Term Savings
In a ULIP investment, investors get a premium paid to them over an agreed period. This can be from 1 month to 50 years and the payment cycle can be monthly, yearly, or at any other interval specified by them.
The ULIP investment policyholder gets a minimum guaranteed rate on their investment for as long as he stays invested in it which depends on various factors like policy tenure and the age of the nominee at inception.
This is paid out to him at regular intervals which could be monthly or yearly depending upon his wishes and needs.
Death Cover
If you have a family to provide for, death cover could prove invaluable.
Many ULIP investment policies also provide dependent or family cover, which gives your beneficiaries an income in case something were to happen to them.
The cover can be for life or a set period such as 10 or 15 years. When taking out unit-linked insurance, check what kind of death and dependents’ benefits are included in your plan.
Critical Illness Cover
Critical illness insurance is just like any other type of insurance policy in that it’s designed to cover expenses that would otherwise be out-of-pocket.
It differs from traditional life insurance, which only pays off when someone passes away. Instead, critical illness policies pay a lump sum after a diagnosis of certain illnesses, most commonly heart attacks and strokes.
Hospitalization Cover
ULIP investment has an optional cover for hospitalization. Due to rising healthcare costs, more people are now opting for health insurance coverage.
The ULIP investment policy is a mixture of both health and life insurance, making it a versatile and comprehensive policy with unique benefits.
The premium amount depends on how long you want to keep your money invested in terms of financial security, as well as your age and current health status. Life expectancy is also taken into account when calculating premiums to ensure one’s protection over a long period.
Return of Premium (ROP) Option
Under an ROP policy, you only have to pay premiums for as long as you need protection. After your claim is settled, your ROP policy ends and your paid-up premium is returned to you (that’s where it gets its name).
This is a great option if you don’t expect to need life insurance for more than 10 years or so. ROP policies tend to be less expensive than traditional policies because they don’t build cash value.
Canara HSBC Life Insurance provides coverage to protect your family against the loss of income due to death or disability. It offers several types of plans based on your needs and budget including term insurance, whole life insurance, and universal insurance which covers both death and disability. Choose the one that’s right for you so you can rest easy knowing that your family is taken care of if something happens to you.
Conclusion
Every year, thousands of investors invest in Unit-Linked Insurance Plans to provide them with financial protection when they retire or to provide the funds needed to enjoy a comfortable retirement in their sunset years. This type of investment comes with several unique benefits that make them ideal as part of any investment portfolio, whether you are an experienced investor or have just recently started putting money aside for your old age.
