ULIP is the best financial cover for future needs?

Posted by ankita on March 20th, 2017

Buying life insurance plans is not a luxury but a necessity of today. It ensures that the financial future of your family is secured, if at any point of time anything unfortunate happens to you. With so many schemes and policies available in the market, it would be in your best interests to take advantage of them and avail the benefits they provide.

Out of hundreds of insurance policies and plans available, some include plain life cover while others offer maturity benefits.

Insurance companies have also introduced Unit-Linked Insurance Plans for its consumers which offer dual benefits. A part of the premium goes for life cover and the rest of it gets invested in market-based funds such as equity, debt or balanced funds. As per the income source and risk appetite you can choose a suitable ULIP.

Some people simply look at providing a risk cover to their loved ones in case of unfortunate incidence, while others may take a step ahead and invest the money in markets to extract higher returns. It is for such customers that ULIP stands as an ideal investment tool. In case of death, the dependents will receive the insurance cover, and also returns on the money invested in the markets by way of premium. While traditional ULIPs are sold actively in offline space, online ULIPsare now gains popularity amongst the people. Life insurance companies have leveraged the power of the internet and introduced online ULIPsthat are easy to buy at extremely cost-efficient way.  Online ULIP policies lay down a convenient path to participate in equity markets while giving life cover at the same time.

Some benefits of buying ULIPs online:

Cost-Efficiency

Offline ULIPs have charges such as premium allocation charge, fund management charge, policy administration, policy discontinuance charge, etc. Online ULIPs are available in the market with no charges for premium allocation, policy administration and discontinuance except 1.35% of fund management charge per annum and mortality charge on the fund value of the customer in order to provide the life cover. Thus, the customer can save more on purchasing a policy online.

Flexible

Online ULIP offer multiple fund options that give better exposure to equity in a single plan. It means the customer will get the full flexibility to choose among the investment funds and the allocation value as per their risk appetite. Besides, insurers offer a couple of free switches and premium redirection in each policy year. Even if the customer exceeds the set of free switches the charges will still be nominal.

Tax-friendly

The premiums paid, earnings received from the fund and the fund value at maturity of ULIPs are tax-free. These tax benefits effectively increase your return on investments. The premiums paid towards the policy by a customer are eligible for tax benefits under Section 80C/Section 10(10) D of the Income Tax Act, 1961, subject to the conditions/limits specified therein.

Life Cover

Apart from the returns on investment, ULIP also provides suitable life cover. It means in case of an unfortunate demise of the policyholder during the policy tenure, a minimum lump sum benefit will be payable to the nominee. So, it provides a financial security right from day one.