The reality is that
staying financially fit in the long run is a very simple task and all it
requires is mindset changes and right investments that can get you on the path
towards financial fitness. However, a successful investment depends on the
series of decisions made in sync with the overall financial goals of the
investor. Right from determining the objectives of your investment to creating
financial plans which accordingly contribute to the success of any investment.
For everyone, financial
security of their families is the foremost financial requirement. We are now in
the time where new-age unit linked plans (ULIP) not only easily provide
financial protection in your absence but also cater to your living benefits.
Living benefits plans are insurance policies that provide financial benefit
while the policyholder is still alive and help them in meeting their important
life goals such as child’s education, worry free retirement for your golden
years, marriage, buying dream home etc. If one plans and invests early in a
well-organised manner, he/she will have fewer worries about finances not just
post retirement but also during the working years.
Here are some of the
living benefits that you get by investing in ULIPs:
Creation of Long Term
Wealth
Everyone has goals for themselves and every
goal needs a backing, primarily financial. Investing in ULIPs helps you create
a corpus over a period of time and can be customized according to the insured
person’s requirements and provide the best for both – investment and
protection. As a matter of fact, ULIPs are the perfect go-to option for people
who need a financial backing for each goal. Thanks to the power of compounding
due to which investment in equities for a long term allows money to grow far higher
ensuring ample future savings. These plans are highly recommended for the
people between the age group of 25-40, once they have settled and can start
investing a part of their income towards future goals. The wealth created by
investing in ULIPs will serve you in achieving your future financial goals such
as education of your child, buying a car or home, retirement plans or other
goals of your life.
Widens Risk Protection
Net
Critical illness and
disabilities are getting common worldwide and is a large threat to our family’s
security. In such a case, it not only takes your savings for meeting the
treatment costs but also wrecks your ability to earn a regular income. But the
good news is that these risks can be covered with the help of riders that are attached
to your policy. The riders provide lump sum pay-outs during emergencies such as
onset of critical illness, provided certain conditions are met. Thus, in one
master stroke you create a wide financial security net for your family so that
the growth of money to meet various life goals is not impacted by these
emergencies.
Encourage Goal-Based
Savings
The longer is your
policy term, the greater are the benefits. There is a lock-in period of 5 years
applicable on ULIP plans, ensuring disciplined savings every month. However,
the policyholder gets rewarded for staying invested for a period of at least 10
years and beyond. This effectively means that you end up saving more for your
life goals. Also, ULIPs allow you to make investment as per your goals in life.
You can select and switch funds as you plan for your child’s education or your
retirement during your investment journey.
Offers Tax Benefits
Tax benefit on
investment- The investment made in ULIPs can be claimed as a deduction under
section 80C of the Income Tax Act, 1961. In order to save more money in ULIP
investment, the premiums that are paid towards the policy are deducted up to Rs
1, 50,000 on taxable income. The tax deduction available is up to 10% of the
sum assured or annual premium, whichever is lower, subject to a maximum limit
of Rs 1, 50,000. But do remember to regularly pay the premiums and continue
your ULIP plan to avail these tax benefits. If the ULIP is discontinued before
2 years, tax benefits will not be allowed. # Tax benefit on withdrawal/
Maturity – The second form of tax advantage that ULIPs offer is found under
section 10(10D) of the Income Tax Act, 1961. The matured amount paid is tax
free.
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