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Kotak e-Term Plan provides a high level of protection to your loved ones in your absence. Know more

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Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and provides an insurance cover against any eventuality. Know more

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Why Should I Invest in ULIP?

Why Should I Invest in ULIP?
  • 2nd Mar 2022 |
  • 473

Investment options have gotten people’s attention like never before in this day and age of financial planning. While some people choose to adhere to traditional investing instruments, others appear eager to try newer schemes. One such popular plan is ULIP. It stands for Unit-Linked Insurance Plans.

Here's why you should invest in Unit-Linked Insurance Plans (ULIPs))

ULIP is a scheme that provides both insurance and investing advantages. In this plan, the payment is split into two parts:

  • One is used to provide life insurance.
  • The other is used to invest money in market assets.

The earnings from even a debt fund in ULIP is tax-free in the hands of the investor, setting it apart from all other market-related investments. While everyone appears to be on the hunt for the best ULIP plan, it begs the issue of why one should invest in it. If you’re unsure whether or not you should put your hard-earned money into a ULIP plan, we’ve put up a list of advantages to help you make an informed decision.

Optimise Your Growth

Investors can choose from several sources in ULIPs, such as debt funds, equity investments, and balanced funds. Depending on your risk tolerance, you can pick one of these options.

If you are a risk-taker, you can ensure higher returns by investing in equity funds. You can also invest in debt funds if you are risk-averse. Choosing between several funds depending on market conditions is a key advantage of ULIPs. As a consequence, you may be able to earn a higher return on your investment.

ULIP allow you to optimize your returns and it is unlike any other investment plan where you can not only get insured but also optimize your returns based on market conditions.

Increased Returns

When compared to other investment options, ULIP returns offer a high potential for maximum financial benefits. These high results may be achieved due to the clear flexibility given by equity and debt funds. Similarly, investing in ULIPs qualify you for certain prizes and incentives. Insurance firms give bonuses in the form of revenue multipliers or loyalty bonuses.

Tax Exemption for ULIP Investments Under 80C

ULIPs are subject to tax deductions under Section 80C of the Income Tax Act. Annually, an investor can receive up to ₹1,50,000 on ULIP investments. Likewise, under Section 10D of the Income Tax Act, the profits you get at the maturity of your ULIP insurance are tax-free. Furthermore, under Section 10 (10D) of the Income Tax Act, the sum received by the nominee upon the death of the insured is tax-free.

Riders Under ULIPs

ULIPs are one of the most effective market-linked investment solutions since they allow you to buy supplementary life insurance for your loved ones through rider options such as critical illness, accidental death, disability, etc., thereby ensuring that they are taken care of even after you are no longer there.

To summarize, ULIPs are a wonderful choice if you wish to get a high return on your investment over time. Furthermore, ULIP under 80C provides additional tax advantages that assist save money. Therefore, you must invest in best ULIP plan that meets your objectives and provides assured lucrative returns.

- A Consumer Education Initiative series by Kotak Life

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