What is Unit Linked Insurance Plan (ULIP)?

Are you looking for great investment options for your long term goals? At the same time you are also worried about your insurance plans and their premiums. Now forget the worries to pay premiums for both investment and insurance as ULIP offers you both in just a single premium. ULIP is combination of insurance with investment that means it provides wealth creation along with your life cover. But how it works? Simply, some part of your investment is kept for your life insurance whereas remaining is invested into equity or debt funds resulting great returns for you. One can also withdraw the invested amount after the completion of lock-in period (at present, minimum 5 years). You can also enjoy the loyalty benefits if you invest in long term ULIP. You don’t need to look after for investment options when you buy ULIP as a separate fund manager is assigned by insurance company to take of your investments

Benefits of ULIP

ULIP has become the most productive option based on its investment cum insurance structure.

Following are the most important benefits of the ULIP:

  • It’s the only product offering life cover with investment.
  • In case of any emergencies like death of buyer, it provides security to your family.
  • It gives you income tax benefit as ULIP is considered for tax deduction under section 80C
  • ULIP is best investment option for long term goals like buying a house or car, marriage, Childs education etc.
  • Based on your risk desire, ULIPS can be switched to portfolio from debt to equity and vice versa few number of times and free of cost.

Do you know these Points about ULIP?

ULIPs are invested into three types of funds based on risk factors.

  • 1. Equity Funds –for higher risk.
  • 2. Balanced Funds – for minimum risk and
  • 3. Debt funds – for lower risk

Policy holder can use their ULIP for ling term life goals like Wealth Creation to build heavy corpus, Child Education, Retirement Planning or for unforeseen circumstance.

There exist two types of death benefits to policy holder 1. Type I ULIP- Pays higher of the assured sum value 2. Type II ULIP – Pays assured sum value plus fund value

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