How to Choose the Best ULIP Plans to Invest in 2022?
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How to Choose the Best ULIP Plans to Invest in 2022?

How to Choose the Best ULIP Plans to Invest in 2022?
  • 15th Jul 2022 |
  • 3,156

A Unit-Linked Life Insurance (ULIP) plan is a life insurance plan that helps the policyholder to create wealth by investing their money in the financial market, along with offering a security blanket against various uncertain life incidences. It combines investment and life insurance to help you achieve long-term financial goals and provide your family security in case of your untimely demise. Under Section 80C of the Income Tax Act 1961, the best ULIP funds can also help you claim the deductions and offer you tax-free benefits.

Understanding the plan better before making any decision will help you to make an informed decision for the future. Below mentioned ways will explain how to choose the best ULIP plan to invest in 2022:

How to Choose the Best ULIP Plans?

  • Understand the Key Features of your ULIPs

ULIP offers the policyholder the advantage of life insurance coverage and wealth creation. However, to get the best out of it, you need to understand the critical features of ULIP:

Fund Switch

If the policyholder is unsatisfied with funds or in case of losses, they can switch their funds to those that match their needs or are profitable.

Premium Redirection

The policyholder can invest their future premiums in funds other than their base fund.

Partial Withdrawal

The policyholder gets the option to withdraw a part of their money.

Top-Ups

This option allows the policyholder to invest the surplus money either in one go or multiple times in their existing policy.

  • Choose a ULIP Plan Depending On your Needs
  • A ULIP plan allows the policyholder to invest their money in equity, debt or both. Investing in equity helps to offer long-term high growth potential, whereas debt helps preserve wealth. Based on the risk appetite and needs, the policyholder can choose to invest in different types of ULIP.

  • Take the Right Amount of Life Cover
  • ULIPs offer policyholders to achieve their life goals and secure them and their families from any uncertain situations. They provide a lump sum amount called the Life Cover so that the policyholder’s loved ones can stay financially secure even after their demise. To increase your family security, you can increase the life cover amount.

  • Stay Invested with ULIPs for a Longer Time Frame
  • Apart from offering life cover, best ULIP funds also helps you in wealth creation. In case you stay invested in ULIPs for a more extended period, the company even provides you with specific bonuses in the form of loyalty additions and wealth boosters to further help you to grow your wealth.

    Get Tax Benefits

    Under the Income Tax Act 1961, you can save your hard-earned money from taxes and avail of various benefits at different stages of your life insurance policy.

    Stage 1: Entry Advantage

    Under the Income Tax Act 1961, you receive tax benefits on your premium payments.

    Stage 2: Exclusive Switching Advantage

    Under this stage, the debt-equity Switches are not liable to tax.

    Stage 3: Exit Advantage

    Under the third stage, you also receive tax-free maturity benefits that are subjected to conditions under Sec 10(10D)

    Know your Charges in the ULIP

    Best ULIP funds help the policyholder to meet protection as well as the investment need. However, both investments have some associated charges; therefore, it is essential to know the details of the costs before even investing in one. Some of the charges are as follows:

    • Premium allocation charge
    • Policy administration charge
    • Mortality charge
    • Fund management charge

    What are the Advantages of ULIPS?

    Transparent Fees Structure

    We demand the highest level of openness and no extra fees before investing our hard-earned money in any financial instrument. The cost structure for the ULIP programmes is well-organized and clearly stated in their policy wording document. Similar to this, the business also gives policyholders account statements on an annual and quarterly basis, along with daily net asset value (NAV) reporting and fund performance, to assist them maintain tabs on their assets.

    High Degree of Liquidity

    One of the nicest aspects of any ULIP plan is the ability to partially withdraw investments once the five-year lock-in period is over. The partial withdrawals option enables the policyholder to take out as much of their invested funds as they require at any time.

    Tax Benefits

    ULIPs are a fantastic financial tax-saving tool that frequently offer specific benefits at each level of the insurance. Under Sections 80C and 80D, the policyholder is eligible for tax benefits on premium payments. According to Sections 10 and 10D of the Income Tax Act of 1961, both the returns and the maturity benefits are tax-free

    Flexibility Options

    ULIPs are a fantastic financial tax-saving tool that frequently offer specific benefits at each level of the insurance. Under Sections 80C and 80D, the policyholder is eligible for tax benefits on premium payments. According to Sections 10 and 10D of the Income Tax Act of 1961, both the returns and the maturity benefits are tax-free.

    Dual Benefit of Insurance and Investment

    In fact, this is the USP behind ULIPs, which combine investment and insurance into a single plan to provide a double advantage. Without really taking part in the stock market, the policyholder of ULIPs receives exposure to growth in the equities and money market. Additionally, this has the added advantage of life insurance, which meets your insurance needs by offering death and maturity benefits.

    In ULIPs, the charges are reduced in the long run, helping to increase wealth creation. To choose the best ULIP, you should compare different plans and select the one that charges a minimal amount in the form of Premium Allocation, Policy Administration, Mortality, and Fund Management Charges.

    Now that you have understood how to choose the best ULIP plans, you can research and make an informed decision.

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