In Unit Linked policies, the investment risk in the investment portfolio is borne by the policyholder.
Why a unit-linked plan is a must for stable fund generation
22th July 2019
If you're a last-minute tax planner, make sure that you link your tax-saving investments to your goals. Tax will scale back not solely the net portion of your pay, but it will also place a dent within the returns from your investments. This is why you would like to take a position in well-thought out investment choices that may boost your financial gain and assist you to accomplish your investment goals.
What is Unit Linked insurance plans (ULIP)?
ULIPs are a mix of protection and wealth creation. When an investor opts for a ULIP, the insurance company offers various funds that can be invested in. The money invested goes into the funds chosen by the investor, and a few charges (for fund management, insurance cover etc.) are deducted from the same.
Why one should opt for ULIPS?
When there are so many options available for the investor, then the question is why ULIPs should be taken as an investment option. Apart from tax benefits, let’s have a look at the three benefits of ULIPs which might help the investor in taking a right decision.
Lock-in period: Ideally, if the investor invests for a larger timeframe, the returns are high. ULIPs have a lock-in period of five years. A seed on investing and saving is sown. Profits on investing is a long term game and ULIPs can be pretty decent in creating a wealth for future.
Tax-free1returns at maturity: The amount which the investor gets at maturity totally depends on how the market has performed. But one good thing is, whatever amount the investor is getting at maturity is tax-free.
Flexible: The icing on the cake is that ULIPs allow the investor to switch the funds during the policy term. This helps in investing in the products which are giving better returns at a particular time.
The question is, what product should be taken if we are ready to take some amount of market risk in exchange for returns? ULIPs can help out with the same. Diversity of fund options offered for investment also play a good game for better and stable returns.
1 The afore stated views are based on the current Income-tax law. Also, the customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law. Tax Laws are subject to change.
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