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Can ULIP Help in Achieving Short-Term Financial Goals?

ULIP for short-term investment plans is considered an excellent tool by financial experts. It provides flexibility to invest in debt, equity, or a combination of the two, balanced fund.

  • 5,952 Views | Updated on: Dec 28, 2023

Do you wonder why most people are dissatisfied with their life? Why do they give up on their dreams? This is mainly due to a lack of proper guidance about financial literacy. If you define your goals and work on an effective plan, you can easily accomplish your financial goals. Financial literacy helps you to articulate your expectations by managing the necessary financial skills such as budgeting, investing, finance management, etc. With the help of financial goals, you are able to cut extra expenses, save more for your future goals and provide financial security for your loved ones.

What are Financial Goals?

Financial goals are the objectives you set over a fixed period while saving, investing, and managing your money. When you have a distinct vision of your dreams, you can design a realistic plan to accomplish your goals. Hence, it is vital to define your financial goals. Now, there are three types of financial goals:

Short-term Goals

The goals that can be achieved in a few months are called short-term goals. Planning a vacation, purchasing a gadget, or starting an emergency fund are all examples of short-term goals. Sometimes, short-term goals can act as small milestones toward your long-term goals.

Long-term Goals

Long-term goals help you meet your requirements in the distant future. These might take ten years or more to be accomplished. Post-retirement goals can be termed long-term goals like saving for children’s marriage, paying off a mortgage, etc.

Mid-term Goals

These financial objectives take longer than the short-term goals but a shorter period than long-term goals. For example, mid-term goals might take from a few months to a few years to be accomplished, such as saving for your marriage, planning to start a business, renovating your house, etc.

Financial planning is pivotal to achieving your goals, preparing for unexpected emergencies, and beating inflation. Long-term plans can take care of your post-retirement life, while short-term investment plans fulfill your immediate needs. Additionally, it helps you track your finances and assess your taxes.

A financial plan is a customized plan designed according to your unique lifestyle. It is determined by different factors such as your income, budget, current financial situation, risk-taking appetite, and goals. Financial planning can be done in the following simple steps:

1. Analyze your current financial circumstances

2. Define your financial goals into long-term, mid-term, and short-term investment plans.

3 .Explore all the investment tools available in the financial market and choose the right fit for you.

There are two possible ways to become financially stable. One is to invest and increase the value of your savings, while another is to purchase insurance to provide financial security in case of an emergency or unforeseen events. What if you get the benefits of investment and insurance in a single plan?

It is possible to do so with Unit-Linked Insurance Plan. A fixed amount of the premiums covers the mortality charges, while the remaining is used to invest in different tools to generate more returns.

ULIP for Short-Term Investment Plans

ULIP for short-term investment plans is considered an excellent tool by financial experts. ULIP gives the flexibility to select to invest in debt, equity, or a combination of the two, called the balanced fund.

Benefits of ULIP for short-term investment plans:

1. ULIPs provide flexibility to pay premiums and select the ULIP based on the duration of the policy, like short-term ULIPs.

2. You can opt for debt-based ULIPs for short-term goals to minimize the risk and keep your investments safer.

3. ULIP offers dual advantages of insurance cover and wealth creation by investment.

4. The maturity amount received after five years is tax-free under Section 10 (10D) of the Income Tax Act.

5. ULIPs allow you to create wealth over a short period and meet your short-term financial goals.

It is often misbelieved that ULIP is only beneficial for long-term goals. However, ULIPs for short-term investment plans can be the perfect option for you, offering financial security, tax-free returns and the flexibility for partial withdrawal. Unit-Linked Insurance Plan is a triple-advantage tool that provides life insurance, capital appreciation, and tax-exemption benefits.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

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.

Amit Raje
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

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