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How to Create Short-Term and Long-Term Wealth with ULIPs - Kotak Life

Know when investing in short term and long term ULIPs are important. Get tax benefits, quick income, long term savings, and diversify your investment portfolio.

  • 4,996 Views | Updated on: Jan 08, 2024

Investment may mean different things for different people. And when you talk of investment, most people are now interested in modern investment options like Unit Linked Insurance Plans or ULIP, as they are highly flexible and can easily help you achieve your financial objective. However, in the investment world, it is believed that ULIPs are only a good long term investment plan. But, if you check the features of long term investment vs short term investment plans, you will realize that by choosing the best ULIP plans in India, you can also gain short term benefits with its help.

Given the flexibility of ULIP and other features that it offers, you can plan on using them as both a short term or a long term investment plan as per your financial goals. But, before you proceed to opt for ULIPs, it is advised that you must understand the difference between short term investment and long term investment goals and what options do ULIPs offer you to meet those goals. Additionally, you must also consider important factors like risk profile, policy tenure, your financial duties and commitments, and ULIP plan charges.

So, before taking you over the key difference between short-term and long-term investments, it is important to understand the benefits of short-term and long-term ULIP investment.

Long Term Investment vs. Short Term Investment

Finding the right ULIP policy for your financial goal can be tricky. So, before you begin the search for the best ULIP policy in 2022, you must do your part of the research by using free online ULIP tools like ULIP premium calculator, ULIP return calculator, and ULIP return calculator for say 5 to 6 years. This will help you with the mathematics around the ULIP policies and help you understand the basic difference between short term investment and long term investment.

Benefits of Short Term ULIPs

As a ULIP policyholder, you can reap multiple benefits. Although, when compared as short term vs. long term investment, most people take ULIP as a long term investment option. However, if you manage your ULIP policy wisely and choose the policy according to your financial goal, you can also leverage short term benefits from ULIPs.

Here are a few short terms vs long term benefits, key points, and differences of ULIPs:

Motivates savings habits

When you talk about wealth creation, developing a habit of regular savings is an important element supporting it. Moreover, ULIPs have a minimum lock-in period of 5-years. So, even as a short term investment, paying premiums for a span of 5-years can inculcate a good habit of saving money in a disciplined manner.

Motivates savings habits

When you talk about wealth creation, developing a habit of regular savings is an important element supporting it. Moreover, ULIPs have a minimum lock-in period of 5-years. So, even as a short term investment, paying premiums for a span of 5-years can inculcate a good habit of saving money in a disciplined manner.

Market linked returns

As ULIPs allow you to deal directly with the market linked funds, it is suggested to keep invested for a longer duration to yield maximum returns.

Security

ULIP, as a modern investment tool, was designed for clubbing both insurance and investment in one single policy. So if you have opted for ULIP, you get the benefits of life insurance and wealth creation opportunities.

Flexibility enablement

ULIP policies are well-known for their flexibility. They offer you a wide range of options to pick from. In addition to this, they also allow you to make changes to the investment portfolio as and when you want. In ULIP, the policyholder is the master of their fund.

So if you are aiming to invest in ULIP for short term, you can try to focus on making more money from your investment by micromanaging this as they are under your control, unlike other investment policies.

Flexibility enablement

You can take tax benefits annually no matter how short or long you remain invested in ULIPs, under sections 80C and 10(10D) of the IT act.

There are various other advantages of ULIPs that make them one of the best policies to opt for and help you identify long term investment vs. short term investment-related goals.

- 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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