Building assets and getting rich are important parts of financial planning. One of the best ways to protect your financial future and reach your long-term goals is to assemble a portfolio of investments that will give you big returns over time. Unit Linked Insurance Plans also called as ULIP plans are one of the most unique types of financial instruments because they combine insurance and investment in a way that no other product does.
Why Should You Add ULIPs To Your Portfolio?
With ULIPs, you can get life insurance and investment opportunities in one package, making them a great addition to your financial plan. ULIPs should be a part of your portfolio for these reasons:
ULIPs are one of a kind in the Indian financial market because they combine investment and life insurance into one plan. You don’t have to buy separate investment products and insurance policies. This makes planning your finances easier while giving you full coverage and growth potential.
The Ease Of Buying And Renewals
One of the best things about ULIPs is how easy they are to buy and renew. There is no need to leave your house to buy a ULIP. It is simple – Download the Aditya Birla Capital App, pick a plan, send in your KYC documents, and finish the purchase.
With ULIPs, you can choose from different types of funds, such as equity, debt, or balance, based on your risk tolerance and market state. For example, you can put more of your money into equity funds if you’re okay with taking on more risk. If you’d rather be more cautious, switch your investments to debt or balanced funds. This allows you to change your investment strategy as your financial goals and the market change.
Options For Add-Ons To Improve Your Investment
Your premium top-up option makes it easy to increase your ULIP investment as your income grows. ULIPs have a feature that lets you add more money to them without buying a new policy. This is a convenient way to improve your investment and possibly get higher returns.
Power of Compounding
One of the best things about ULIPs is that they can use the power of compounding. Through ULIPs, you can invest in the stock market and watch your money grow. It also earns returns that can help you beat inflation. The longer you keep your money in an investment, the more your returns compound, which means that over time, you will have a lot more money.
Taxation
There are big tax breaks for ULIPs. Part 80C of the Income Tax Act, 1961, lets you deduct the premiums you pay for ULIPs from your taxes. ULIPs are also tax-efficient investments because the maturity proceeds are tax-free under Section 10(10D).
Start investing in ULIPs early. They lock in for five years, so early investment boosts growth and returns. Keeping it after the lock-in further increases wealth chances. Early ULIPs save on insurance and speed up growth. A ULIP combines insurance with investment. It offers flexibility, transparency, tax benefits, and wealth potential. Yet, ensure ULIPs match your goals, risk level, and timeline. A financial advisor can optimise your investment.
