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ULIP Investment Benefits You Must Know

Here are the top 6 benefits offered by Unit Linked Insurance Plan (ULIP) for a safe and financially secure retirement. Start boosting your retirement savings.

  • 2,923 Views | Updated on: Jan 10, 2024

Searching for an investment option that could deliver high returns and utmost flexibility, along with life cover? A Unit Linked Insurance Plan (ULIP) can be an excellent choice.

Known as one of the most flexible investment options in India, ULIPs efficiently match the long-term objectives of every investor.

Here are 6 top benefits that make ULIPs an ideal choice for everyone-

1. Flexibility to Choose Fund of Your Choice

When you invest in ULIP, the premiums are divided into two parts- investment and life insurance. Most insurers offer various fund options to help investors choose a fund as per their objective and risk appetite.

The fund options include equity, debt, and balanced funds. Moreover, investors also have the option to switch between these funds multiple times throughout the tenure.

2. Option to Adjust Life Cover

Investors are free to choose the sum assured of their ULIPs at the time of purchasing the plan. The policy premium is calculated as per the sum assured selected by the investor. Some insurers also offer the flexibility to adjust the sum assured throughout the policy tenure.

The life insurance requirements change as we go through various milestones in life. This sum assured flexibility in ULIPs allows investors to increase their life cover for different life stages, including marriage, childbirth, and more.

3. Adjust Investment Amount

It is generally recommended that one should start investing in ULIPs as early in life as possible as these are long-term products. But it is often the case that most people do not have a lot of savings to invest in ULIPs when they are young.

With ULIPs, you also get the option to increase the investment or premium amount. This can help increase the amount you invest in the selected ULIP fund and even the life cover offered by the policy. So, even if you purchase ULIP when you are young, you will always have the option to increase the investment amount as you start earning more.

4. Multiple Add-on Options

Many of the life insurance policies in India now come with optional riders. Some ULIP providers also offer these riders, including accidental death rider, permanent disability rider, critical illness rider, and more.

Investors can consider purchasing these riders to further extend the scope of their life insurance policy. While the riders slightly increase the policy premium, they do an excellent job of enhancing the features and life cover of the policy.

5. Tax Benefits

As ULIPs are primarily life insurance plans, they are eligible for tax benefits. By investing in ULIP, one can claim a tax deduction of up to Rs. 1.5 lakhs on annual premium under Section 80C of the IT Act.

Additionally, the maturity benefit of ULIP is eligible for tax exemption under Section 10(10D) of the IT Act. These benefits make ULIPs a highly tax-efficient investment option.

6. Lock-in Period of 5 Years

ULIPs come with a lock-in period of 5 years. Once this lock-in period is over, investors have the option to make partial withdrawals from their ULIP investment.

While it is recommended that one should remain invested in ULIP throughout the minimum tenure, this partial withdrawal option could come in handy in case of a financial emergency.

Experience Utmost Flexibility with ULIPs

As can be seen, there are several flexible benefits that make ULIPs an ideal investment choice for every individual. Along with life cover, these plans offer the professional assistance of an experienced fund manager who oversees your investment and tries to take maximum advantage of every possible opportunity.

If you are searching for an investment option that adds stability and flexibility to your investment portfolio, ULIPs are indeed a great choice.

- 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

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

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