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Planning to Invest in ULIP? 3 Top Reasons to Consider This Long-Term Investment Option!


Wondering what ULIP is? Integrating the advantages of investing and life insurance into one policy is called a Unit-Linked Insurance Plan (ULIP). The investment option aids in monetary goal-achieving and provides monetary safety for your family and friends in the unlikely scenario of a fatal accident. 

According to the regulations’ particular conditions, the death compensation amount may consist of the policy’s capitalization or the total amount assured, whichever is greater. A ULIP could make safeguarding the financial well-being of your family while you’re away easier.

Knowing what advantages the plan could provide might help you make an educated decision if you’re thinking about buying a ULIP. Read this article to discover why you should get a ULIP and how it helps you.

  1. Premium redirection

You can elect to allocate your upcoming premiums to an alternative fund through premium redirection. Your first choice of investment will continue to receive all of your prior premiums due. In the newly created fund, you will be able to pick where the money you pay for premiums remains invested going forward. This enables you to alter your prospective financial decisions without compromising the profits of your previous ones.

  1. ULIP tax amenities on maturity

Based on the conditions outlined therein, ULIP provides maturity advantages in accordance with Section 10 (10D) of the Income Tax Act of 1961. In the case of policies purchased after April 1, 2012, the cost of premiums must not exceed 10% of the total insured to qualify for tax incentives upon maturity. 

The annual cumulative cost for a plan purchased before April 1, 2012, must be less than 20% of the total amount guaranteed in order to qualify for tax advantages. The Union Budget of 2021 states that the matured amount of an insurance policy obtained on or after February 1, 2021, could potentially be taxable under Long Term Capital Gains tax if the aggregate yearly premium collected exceeds Rs 2.5 lakhs (LTCG).

  1. Dual amenity 

With ULIPs, you can get both investment and life insurance benefits in a single and convenient bundle. These are special financial options. If something unpleasant happens to your family members while the coverage is in effect, the life cover from a ULIP will shield them economically. Your financial aspirations may come true when the policy term ends, and you receive the profits from your investments.

In a nutshell, this investment tool offers the advantages of both investing and getting life insurance. You can receive both the required life insurance and the possibility of earning a return on your investment with just one policy, as a policyholder. Additionally, it might serve as a tax-saving financial choice that lets you change and adapt your investment plan at any moment.

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