ULIP policies have been quite popular amongst first-time investors and other buyers who want to benefit from the dual advantage. The insurance policy enables you to invest in the equity market and gain higher returns. Though the market experiences high volatility, Unit-Linked Insurance Plans offer that long-term stability to gain lucrative returns from your investment. So, are the new-age ULIP plans a smart investment choice for millennials? Let’s find out below:
Flexible investment option
As an investor, sometimes, mistakes do happen while making an investment decision. If this were to happen in regards to market-linked instruments, there are high chances of losing funds due to increased volatility. But when it comes to ULIP, you don’t have to worry because of the fund switch feature. This facility is not only beneficial for securing your investment but also helps plan your returns based on life-stage goals. Thus, you can switch from equity to debt funds in case the market is too volatile or if you want to earn stable ULIP plans returns due to increased age. Therefore, as a millennial, ULIPs go a long way in providing you with good returns. Check out the ULIP calculator to estimate how much returns you can earn!
Return of mortality charges
As you know, Unit-Linked Insurance Plans have a risk cover plus an investment component. This risk cover ensures your loved ones have a financial backup in the event of an unfortunate mishap. But to provide you with a life cover, the insurance provider charges you a mortality fee that gets deducted from the premium. However, with new age ULIPs, insurers are now returning the mortality charge that was levied until maturity. The total deducted sum is added to your fund value on maturity and returned to you at the end of the policy tenure. Therefore, you choose such a ULIP policy to eliminate mortality charges.
Tax perks on ULIP
New investors are all about tax savings and making the most of their investment. With ULIP, you can do just that and more! The premiums paid towards securing your ULIP policy can be claimed under Section 80C of the Income Tax Act. A limit of INR 1.5 Lakh applies to the amount you can claim per financial year. Apart from this, the death and maturity payout can be claimed as tax-free under Section 10(10D) of the Income Tax Act. But as a first-time buyer, you must remember that your annual premium should be less than INR 2.5 Lakh to enjoy tax perks on the maturity payout. This new rule was introduced in Budget 2021 for newly bought policies.
Online purchase option
With the advent of technology, almost everything can be bought and completed online from the comforts of your home. Due to this, most individuals now prefer to get tasks done online to save time and efforts. Similar to the way you shop for clothes and groceries through online websites, insurance policies can now be bought on the internet. This not only offers you an effortless mode of purchase but also provides some discount. Online ULIP plans are much more affordable in terms of cost and have no premium allocation charge. Therefore, this method of buying ULIPs on the internet is a beneficial option for individuals.
Additional premium option
What if you have some surplus amount that you want to invest in ULIP? Can this be done? With the top-up premium facility, you can dedicate an additional sum towards your policy over and above the premium amount. This can go towards securing extra coverage or towards your investment fund. Thus, you can gain more sum assured if your responsibilities have increased. Or else, you can earn more ULIP returns by directing the surplus into the fund. You can make use of this feature anytime during the policy term for lucrative insurance benefits.
With the above pointers, you must have understood how ULIPs are the best and smartest investment option for millennials. By using online ULIP calculators, you can personalise the policy to suit your insurance and investment requirements. However, it is advised to thoroughly read your policy document and know the exclusions to avoid any issues!
