5 Reasons Why Should You Invest in ULIPs

What is ULIP insurance?

Unlike traditional life insurance policies, a unit-linked insurance plan provides coverage and investment options. Your premium gets divided into two parts: one covers life insurance to secure your family, while the rest is invested in various asset classes. The investment alternatives are equity funds for those looking for high growth, and debt funds for investors seeking stable returns.

Why you should invest in ULIP?

Here are some common reasons why you should invest in ULIPs.
 

Fund switching flexibility

• The ability to switch funds enables you to change your allocations in equity, hybrid, or debt categories, according to your risk appetite and the performance of various fund options in the market.

• This valuable feature allows you to transfer your invested capital, either totally or in parts, from one type of fund to another without any switching fees.

• If you track the movement in capital markets regularly, these switches can be easily done sitting in your home without much effort.

• Many ULIP offerings include several free fund switches each year, allowing you to customise your investment strategy without additional cost.
   

Fund liquidity during lock-in period

• ULIPs have a five-year lock-in period, which is the minimum time during which surrender or full withdrawal is not allowed.

• However, partial withdrawals can be done after you have completed the minimum lock-in period.

• During the five-year lock-in period, you are free to switch your investments among different fund options with no charges.

• The completion of this minimum five-year period is necessary to avail the tax* benefits related to your ULIP investment.
   

Tax benefits

ULIP investments come with triple EEE (Exempt-Exempt-Exempt) taxation* benefits, ensuring tax exemption at three critical stages in the life cycle of your investment.

• Investment stage: Annual premium payments are eligible for tax* deduction, substantially reducing your taxable income.

• Returns stage: When the compulsory lock-in period expires, you can withdraw your accumulated funds along with the returns on it with tax* benefits.

• Withdrawal stage: Both the returns gained, and the amount assured are completely tax-free*, and even the interest that is accrued at maturity is tax-free*.
   

Higher returns

• ULIPs usually offer higher returns than traditional insurance products and savings instruments.

• The ability to adjust your fund composition by market trend analysis helps you get potential returns.

• Your premiums are invested in different asset categories, and the investment decisions are taken by professional fund managers.

• These plans maintain relatively modest charges for premium allocation, administrative services, and fund management operations, enhancing overall returns.
   

Assurance's reliability

• ULIPs serve as dependable long-term investment options. Evaluating whether your insurance provider can deliver adequate coverage during unforeseen circumstances or future financial obligations remains critical.

• Since the insurance company manages market investments for you, researching the insurer's historical performance and reviewing customer feedback before committing a ULIP investment is essential.

Conclusion 

ULIPs combine life insurance protection with investment opportunities, helping you plan your long-term financial goals. Tata AIA Life Insurance offers a range of ULIP insurance that align with varied financial needs and budgets. You can also use our online ULIP calculator to compare and choose the best ULIP for your needs. With features such as fund switching flexibility, tax* advantages, and professional fund management, ULIPs enable you to build wealth systematically while ensuring financial security for your loved ones.