After all the hustle and bustle of youth, the golden years of life appear to be a time to treasure. The delight of being surrounded by grandkids, or watching your children achieve their educational and career milestones is unparalleled. Although, even in these golden years, one thing that remains constant is the desire to be financially independent. Whether you begin early or later in life, it is critical to build a strong investment portfolio that does justice to your hard-earned money by providing excellent returns and security assurance. This is where ULIP comes in.
ULIP stands for Unit-Linked Insurance Plan and it operates as a hybrid of insurance and investment products. The policyholder not only receives coverage but also has a portion of their monthly instalments invested in different funds. A ULIP for older citizens invests in a variety of securities, including stocks, bonds, or even a mix of the two. Further, in combined ULIP, the ratio of investment money paid to equity or debt securities is determined by the policyholder’s risk appetite and financial plan. Here are some features of ULIP Policy that can be considered for senior citizens:
Life Insurance
When it comes to understanding what is ULIP or what are its primary benefits, it can be stated that the most important benefit of buying a ULIP is the life insurance policy it gives to the policyholder. By acquiring a life insurance plan, the policyholder ensures that their loved ones will be taken care of in the case of the policyholder’s unfortunate demise.
Fund Flexibility & Switching
Policyholders with ULIP policy have the ability to swap funds at any moment. Due to the obvious ease with which policyholders may move between funds, they can easily manage their investments depending on their unique risk assessments and financial objectives. Several ULIPs provide policyholders with several free changes every year, allowing them to readily switch in between funds based on their needs and awareness of the market conditions. In some circumstances, switching funds helps investors to beat the market and achieve larger returns.
Increased Returns
Due to their propensity to create high returns spanning between funds, ULIPs can deliver substantial returns to investors. Depending on the policyholder’s risk profile and financial goals, ULIP might invest significantly in a certain type of investment. ULIPs can invest a bigger amount of money in debt securities, which provides lower returns but better protection for the money invested. ULIPs also allow policyholders to participate in hybrid funds which offer a balanced mix of equity and debt funds, thereby ensuring good returns while also ensuring the security of assets invested.
Ease of Partial Withdrawal
Unforeseen financial events can arise in the lives of senior people necessitating prompt action. A ULIP policy can prove to be quite useful in these situations since it allows policyholders to make partial withdrawals once a set length of time has passed. Most ULIPs include a five-year lock-in term after which, the insured can draw funds to deal with urgent financial situations.
Tax Exemptions
Policyholders who invest in ULIPs can avail a variety of tax benefits. Several provisions of the Income Tax Act give income tax benefits, including tax deductions on insurance premiums and exemptions on the fund’s earnings at maturity. Policyholders who move across funds to maximize their returns are also eligible for tax benefits.
To conclude, ULIPs are an excellent option for senior citizens who want to create wealth even in their golden years while also ensuring that their loved ones are taken care of when they pass away.
- A Consumer Education Initiative series by Kotak Life
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Reviewed By :
Prasad Pimple
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
