Gain Tax Free Sum Assured Through Ulip Investment. Here’s How

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Ulip Investment

The majority of the workforce in India consists of young working professionals, which also account for 34% of the total population in the country. They’re the prominent drivers of the economy and always come up with new products and services that solve various modern-day problems.

However, it’s noticeable that the younger generation is not leaned much towards savings and investments. Although a significant portion of millennials does invest in various schemes, they have comparatively lesser risk-taking capacity than their predecessors.

That’s why unit-linked insurance plans are considered as a promising investment opportunity for the younger audience as it possesses lesser risk as compared to other high-return investment schemes available in the Indian market.

With that said, here’s why ULIP plans are worth considering for young working professionals in the present era:

Why ULIP Investment is Worth for Younger Audience?

When you begin investing in a ULIP at a young age, you have plenty of time to grow your invested capital. Moreover, as you continue to age, you’ll find your insurance premiums more aligned with your future financial goals and requirements.

It also helps you develop disciplined money spending habits as you’ll focus on cutting expenses and budgeting a lot. With the various features and benefits of ULIP plans, you can easily fulfill your dreams and aspirations in life without depending on anyone.

Unit Linked Insurance Plans are the perfect investment option for millennials as it provides both life cover and investment benefits integrated into a single plan. Here’s a quick rundown of benefits offered by these plans:

Create Wealth in Long-Term

Among the various investment products available, ULIP investments are considered to be a prominent way of generating wealth, especially when the 4th generation of these plans is already available at your disposal after getting through several necessary changes.

When you invest in these plans at a young age, you can keep accumulating your income for the long term and build an enormous corpus of monetary resources for your future needs. Moreover, as long as you stay invested, your capital will keep growing.

Although the plan invests your money in market-linked instruments like bonds, debt, and equity, market volatility might affect it, but you can always switch between multiple funds as per your investment preferences to mitigate the risk.

Gain Higher Returns

Short-term investments are often considered to be very volatile as the market moves up and down almost every day. However, by investing long-term using unit-linked insurance plans, you can gain higher returns without much risk involved in the process.

These investments usually work on a compounding principle that allows you to accumulate a large corpus for your financial needs. If you invest at the age of twenty-five with just Rs. 5,000 every month, you’ll have around 60-70 lakhs rupees after 25 years at a return rate of 10%.

This makes it crystal clear that the longer you stay invested in a ULIP investment plan, the higher amount you can accumulate for your financial corpus. Once you’ve accumulated a significant amount, you can use it as per your will.

Lesser Charges

When ULIPs were introduced in the financial market, they were quite expensive. However, with the launch of the newer generation of plans, charges associated with these plans have dropped gradually, making them a lot more affordable.

Traditionally, while purchasing a ULIP, you also had to pay overhead expenses like fund management charges, mortality charges, premium allocation charges, policy administration charges, and a lot more. Nowadays, the online availability of these plans has made them much affordable.

Moreover, there are even some plans that offer a return of mortality charges upon the maturity of your plan. This virtually makes the insurance cover free as you’ll get back the mortality charges when your plan’s tenure is over.

Tax Benefits 

The most prominent benefit of ULIP investment plans is that they act as great tax-saving tools too. Unlike mutual funds investments, you can enjoy tax-saving benefits on the withdrawals of your ULIP plan, which further boosts your corpus.

As per section 80C of the Income Tax Act of India, the investments made in ULIP are eligible for a tax deduction of up to Rs. 1.5 Lakhs. Moreover, you also get a tax rebate on the premiums you’ve paid for the benefits of these plans.

When you begin investing in these plans at a young age, you can gain the most benefits on taxes as you’ll be able to invest for the long term. This ensures maximum savings on taxes that can be used for your future monetary requirements.

Goal-Oriented

Whether you’re looking to purchase a new house or fund your child’s higher education, you can align your investments as per varying life goals with unit-linked insurance plans. Moreover, the plan also uses a part of your premiums to offer life cover to you.

Based on your financial goals and risk appetite, you can also switch between various fund options to maximize your return on investment. If you want to invest for the long-term, ULIP plans are perfect and allow you to fulfill all your dreams and aspirations in life.

Not to mention, you can also reconsider the policy at various stages of your life to ensure that it remains profitable. Consistent and regular savings over a specified time can yield very promising returns in the long run.

Bottom Line

With the combined benefits of both security and investments, ULIP policies are surely a perfect investment opportunity for people looking to attain financial security. If you have any specific goal for the future, you can start investing as soon as possible to make sure it becomes a reality.

Therefore, make sure you check out the various ULIP plans available in the market with ranging features. As soon as you begin investing, you can gain the most benefits out of these policies, especially if you’re currently young.