Savings and investments are an important part of your financial life. With several investment plans in India, it can get a little difficult to choose the right one for yourself. You should always settle for an investment that fetches you stable returns at minimum risk. Before making any investment, it is advisable that you evaluate your risk-appetite. Investing according to your risk appetite can help you meet your financial goals with ease. Let us have a look at an investment plan that can help you fetch higher returns and fulfil your goals.
Unit Linked Insurance Plan (ULIP) is a contemporary investment product that provides both insurance and investment under a single plan. In case of ULIP, a portion of the premium you pay is used to provide life cover and the remaining portion is invested as per your choice. Depending upon your risk-appetite, you can opt for a high, medium or low-risk investment option under the same policy. In addition to that, ULIPs also provide flexibility to choose either the sum assured or the premium based on your requirements. Let us have a quick look at some of the other most important benefits of ULIP.
Fetches more returns
ULIPs provide higher return as compared to fixed deposits. Also, you can invest in ULIP according to your financial goal and risk appetite. ULIP is a long-term investment plan and hence, it is advisable to should stay invested for a long period. This will help you reap for higher returns and other benefits. In case of ULIP, your investment is dependent upon market fluctuations. Therefore, if the market is underperforming, instead of withdrawing the ULIP, you should stay invested until the market bounces back. However, if you need funds, you can consider partial withdrawal to meet your financial requirements. Continuing the ULIP till maturity can give your investment a chance to flourish.
Helps you meet your financial goals
Unit-Linked Insurance Plans encourage goal based investing. Since goal based investing requires you to plan your life goals in advance and save for them in a disciplined manner, it can also play a crucial role in your financial stability. Additionally, goal based investing helps you improve your spending habits and makes you less vulnerable to debts. ULIPs can help you achieve your financial goals. You can easily meet your important life goals such as purchasing a home, buying a vehicle, financing your children’s higher education, saving for your retirement, etc. with the help of ULIPs.
As per section 80(C) of the Income Tax Act, you can avail tax benefits on the premiums paid towards the ULIP plan. It is to be noted that the Budget 2020 introduced a new tax regime which does not offer this tax benefit. That being said, is up to you to pick and choose the tax regime you want to be covered in. You also get a tax-free Maturity Benefit, under Section 10 (10D). This makes ULIPs one of the investment options available
Now that you know how to invest money to fetch higher returns and meet financial goals, ensure that you make the most of it. Lastly, make sure that you read and understand the all the policy terms carefully before going ahead with the investment. In case of any query, you can consider seeking the help of a financial expert. This will help you avoid any inconvenience on the later stage.