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Kotak e-Term Plan is a pure term plan that provides a high level of protection to your loved ones in your absence.
Kotak e-Invest is a comprehensive Unit Linked Life Insurance Plan that can be customized as per your goals and needs - be it protection; investment; financial security for child or retirement planning.
Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and insurance cover against any eventuality.
Kotak Lifetime Income Plan gives you the assurance of your income continuing throughout your life and in your absence throughout the lifetime of your spouse!
The Kotak Health Shield Plan helps secure your finances in times of sudden medical expenses related to illness such as Cardiac, Liver, Neuro and Cancer (all early and major stages of illness /conditions of Cancer); along with offering protection for Personal Accident - in case of accidental death or disability.
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The straightforward answer to this question is No! Unit Linked Insurance Plan or ULIP is not a complex financial product. It is only different from the traditional insurance products, which makes it unique for policy buyers to understand. ULIP is a financial product that provides risk coverage (Insurance) along with investment opportunities in market products like Bonds, Debts, Equities, Mutual Funds, etc. to maximize an individual’s financial growth. ULIP plans are well-known majorly due to good investment returns, ULIP tax benefits, and ability to manage portfolios, among other advantages of ULIPs.
ULIP = Insurance + Market Investments
ULIP seems to be a tricky financial product, because through a ULIP policy an individual gets access to both life insurance and market products like mutual funds, debentures, equities, etc., which in themselves are complex financial products. It has been noted that very often ULIPs are compared with other financial products like mutual funds and simple term insurance plans, which is wrong.
ULIP being a combination of different financial insurance and investment products needs a deep understanding of all such financial products and policy matters. In addition to this, while investing in ULIP policy you also need to emphasize on your financial needs and goals and pick a policy accordingly.
So, it is suggested that before making a decision to invest in a ULIP policy, one should consult an insurance agent and discuss in detail all the important details and policies of ULIPs offered by different companies, and then decide which fits best to your needs.
As you must have seen in many advertisements and in general also, it is advised to go through the documents of any investment plan as many of them are subject to market risk and have varied policies that you as an investor should know. So here are some important parts of the ULIP policy document that one should carefully read:
1. Administration charges of the policy
2. Allocation charges
3. Redemption charges
4. Policy switching charges
5. Policy returns guidelines
In addition to this, financial experts and advisors highly recommend that you take time and go through all the policy-related documents thoroughly before making an investment move.
Very often ULIPs are compared with mutual funds (MFs), in day-to-day life and due to lack of financial awareness. Let’s understand in brief, how ULIPs are different from MFs?
The major point that differentiates ULIPs from Mutual Funds is that the MFs don’t offer insurance cover along with investment opportunities. Also, not all mutual funds give you tax benefits, whereas most ULIPs serve as a one-time investment plan with tax benefits.
Compared to other investments, ULIP taxation benefits are a wise consideration. The premiums paid on ULIP policies are eligible under 80C deduction for a sum of up to ₹1.5 Lakhs in one financial year. In addition to this, another ULIP tax benefit is that the amount you receive on maturity of the ULIP plan is exempted from tax under section 10 (10D).
Thus, in conclusion, if you’re looking for one-time investment plans with tax benefits, ULIP is your investment destination. ULIP taxation benefits along with other advantages make it one of the best investment options for you.
- A Consumer Education Initiative series by Kotak Life
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