Financial protection has become crucial during the time of pandemic. A unit-linked insurance plan (ULIP) offers life cover as well as returns. Therefore, it can make you secure in such a situation.
Read on to know why investing in a ULIP can help you during the pandemic.
A unit-linked insurance plan is a plan that offers returns as well as life cover. When you invest in a ULIP, a part of the premium goes towards life cover, and the other part is invested in equities, debts, etc.
ULIP plans are a great option for securing you in case of any unforeseen event. It can help you reduce the financial burden that might be caused by the pandemic. Such plans can provide you with life cover. ULIPs also allow you to accumulate a substantial corpus by investing your premiums in the funds you select.
Here are the benefits that ULIPs provide-
- It Can Offer Life Cover
One of the most important benefits of ULIPs is that they can offer life cover. Therefore, in case the policyholder passes away during the tenure of the policy, then his/her family can get life cover. This life cover can reduce the financial burden.
- It Allows the Policyholders to Make Investments
ULIPs enable the policyholders to make investments in various investment options based on their choice. They can choose from a variety of fund options such as equity, debt, etc., depending on their risk appetite. Therefore, it can allow the policyholders to create wealth. With the help of a ULIP, an insured person can build a significant financial corpus that can enable him/her to meet various life goals.
- It Provides Tax Benefits
By investing in a ULIP, a policyholder can save money on tax. The premiums paid towards purchasing the ULIP can be claimed as a tax deduction up to Rs. 1.5 Lakh under Section 80C.
- It can Help Policyholders Achieve Financial Goals
ULIPs can help policyholders earn significant returns. These returns can enable them to achieve their financial goals, such as accumulating funds for a retirement corpus.
What Should You Know Before Investing in a ULIP?
- While selecting a ULIP, you should know how it can help you achieve your financial goals. Furthermore, you should plan to stay invested for a longer period as it can help you gain higher returns.
- There are various charges that you will have to pay in order to purchase a ULIP. Some of the charges are- fund management charge, premium allocation charge, etc.
- There is a lock-in period of 5 years.
- Partial withdrawals are allowed after 5 years.
- In case the policy is discontinued after 5 years, then you can revive the plan within two years of discontinuation.
- ULIPs offer various benefits like premium redirection, partial withdrawals, etc. However, there might be a few conditions, such as the limit on free partial withdrawals, the limit on the number of free switches, etc. You should know them before purchasing a ULIP.
Keep the before mentioned points in mind while selecting a ULIP, as it can secure you in case of a pandemic.