Monday, June 24, 2024

Things to Know Before Investing in a ULIP


As a first-time investor, you might have many questions regarding which investment is right for you, whether you need market knowledge to invest and more. Unit Linked Insurance Plans (ULIPs) can be an ideal investment avenue for you since they offer the triple advantage of life insurance, wealth generation, and tax savings. Here’s how you can benefit from investing in such plans.


It could be quite confusing to search for an adequate life insurance plan that also serves as an investment option. ULIPs combine the best of both worlds – wealth creation as well as life cover. Your family receives a death benefit in the event of any unforeseen circumstances, leaving them financially protected. The insurer invests a part of your premium into a mix of equity and debt funds, to offer you market-linked returns upon maturity of the plan.

Thus, you get to build a corpus for various needs, such as your retirement years, children’s education and marriage, and other goals.

Varied Risk Appetite

The portion of equity and debt in your investment fund in a ULIP is your choice. It can be structured based on your risk appetite. So, even if you have a conservative approach in your initial investment years, a Unit-Linked Insurance Plan could still work for you.

Huge Flexibility

You can start small and grow your savings over time. For instance, with Edelweiss Tokio Life – Wealth Secure+, let’s you start investments with as little as ₹1,000 per month. You can add your spouse and children to the plan, and even enjoy loyalty additions annually after the 6th policy year. Not only this, but the plan also offers zero charges on fund switching which works well to manage your portfolio as per your needs.

Varied Fund Management Strategies

If you’re worried that you might not have adequate market knowledge to manage your funds properly, you can choose a life-stage or duration-based strategy. Under this, the insurer will manage your funds based on your goals through experienced fund managers.

Tax Benefits

In case you pay premiums less than ₹2.5 lakhs in a year, for a policy bought after February 2021, you can tax exemption under Section 80C of the Income Tax Act, 1961.

Fully or Partially Withdraw Funds

If you feel that the plan is not suitable for your future goals, you can choose to withdraw funds fully or partially after the lock-in period of 5 years. This is also useful for emergency needs.

Proper investment is a life-long process. You should evaluate it continuously to achieve your financial goals. Choose to educate yourself too. Read all the policy documents carefully to make an informed decision.

Every working professional should have a solid retirement plan in place. Building a fund for future use may not be adequate with the rising prices and uncertainties. Choosing an investing strategy that includes life insurance is a wise decision. Consult an expert today to learn more about ULIP programmes.