In this generation of unpredictability and uncertainty,
life insurance policies guarantee an agreed-upon sum in case an untowardly
proceeding takes place. However, it was soon realized that a small majority of
people were more interested in savings and returns during their lifetimes
rather than pay a premium towards a plan that only guarantees a sum assured in
the event of uncertain death.
This loophole led to the advent of ULIPs that combined
the best of both worlds and optimizing profits without having to invest in two
different policies.
What
is a ULIP, and how do they
work
A ULIP, short for Unit Linked Insurance Plan, is a hybrid
between insurance and investment, hence offering you benefits from both
segments with flexible options, in effect providing you with a life cover and
diversifying your investment for better returns.
What a ULIP does is create a base insurance plan tailored
to the needs of the potential policyholder, and provide an additional feature
of investing your premiums, just like a mutual fund, in the market to plan your
future financial goals strategically.
Unlike standard insurance policies, ULIPs are open-market based investment plans, and based on market performance; the policyholder reaps its benefits. However, contrary to popular belief, ULIPs are not full-fledged stock market investments, and, in a way, grow steadily and minimize risks subject to stock market volatility wherein a small portion of your premiums are set aside towards life insurance. The rest is invested. The best part about this is that the policyholder does not have to involve himself/herself in the “where to invest” part.
What
are the risk factors involved
Although the risk factors are not as high as stock market investments, the “Where to invest” segment is customizable depending on the policy holder’s risk appetite. If the policyholder wishes to minimize risk and does not expect sudden bursts of profits and would instead go for steady growth, he/she may choose to invest in low-risk debt funds. Equity investments are better suited for investors who are aggressive with their investments.
Do
ULIPS qualify for tax saving benefits
ULIPS are exempted from tax under section 80C of the Income Tax Act, 1961. Similarly, the pay-off amount upon maturity is exempted under section 10(10D) of the Income Tax Act.
What
establishment should I opt to invest in a ULIP
There are a plethora of choices available for an investor
in the markets today. Touted as one of the best investment-linked insurance
providers in the country, Edelweiss Tokio offers you a range of ULIP options to
choose from based on your requirements to suit your needs.
With low premiums and strategically designed flexible
payment schedules, Edelweiss Tokio makes sure you are protected at all times.
The company also gives you the flexibility of switching
between funds based on circumstantial dynamic changes so that you do not miss out
on optimal conditions and better performing funds at any given point of your
tenure.
Happy investing!
No comments:
Post a Comment