How to Use a Single ULIP to Meet All Your Life Goals

It is quite easy to jot down your life goals. However, it is difficult to achieve them. Saving money is a good habit, but investing it wisely in financial products is a better way to grow your wealth. Unexpected financial emergencies can create restrictions in achieving your financial ambitions. This is when the need for an ideal investment instrument arises. Investing in Unit-Linked Insurance Plan (ULIP) is one of the best methods to insure your life and build a substantial corpus, which can help you in meeting the important milestones of life.

Let us understand what is ULIP plan first before discussing its various features. It is a type of insurance policy that boasts two primary components, which include life insurance and investment. ULIP allows investors to choose and invest in funds of their choice. They can invest in equity or debt funds according to their risk-bearing capacity. Besides this, ULIP is the only financial product available in the market that allows switching from one fund to another, reducing the risk of market uncertainties. It also offers tax benefits under Section 80C and 10(10D) of the Income Tax Act, 1961. The premium paid towards the ULIP is tax-exempt under Section 80C. Here, the maximum permissible limit of exemption is capped at INR 1.5 lakh per year. Moreover, as per Section 10 (10D), the maturity value is tax-free. 

How can ULIP help to meet long-term financial goals? 

You can fulfil your monetary objectives by:

  1. Investing in your financial aspirations

While investing in ULIP to meet your financial goals, retirement is an unavoidable milestone when compared to other pursuits. Therefore, it is advisable to keep this objective separate from other aspirations. You can shift the savings that are left over to your retirement corpus after fulfilling other financial goals. As you are investing in a single ULIP investment plan, you must know the limitations, which include:

  • You need to set the ratio for life insurance at the policy’s commencement
  • You can avail of a tax exemption on the premium paid, only if the total amount is lower than 10% of the sum assured
  1. Selecting a single ULIP

The ULIP you choose will have to meet your various financial aspirations. Therefore, it becomes essential to pick the right type of plan. Opt for a ULIP that offers multiple benefits and features that can help you achieve your goals in the long run.

One key feature, which ULIP offers is automatic portfolio management, wherein you can align your investment with your financial goals.

Automatic portfolio management plans do all the hard work of handling your portfolio and allow you to reap the benefits of better returns. Here are some offerings of such a plan:

  • Allocates assets based on the conditions of the equity market
  • Limits the risk of your investment
  • Protects your capital investment and returns from the uncertainty of the equity market
  • Transfers the returns earned to liquid funds
  • Safeguards the income generated from the investment during the end of your policy tenure

Choose a ULIP that offers such features, as it will carefully manage your long-term investments and help you achieve your financial aspirations until your policy’s maturity.

Every person has financial goals set for the future, and ULIP can prove to be a much more valuable investment avenue in comparison to other instruments. ULIP returns in 10 years are significantly higher than the other investment alternatives like Systematic Investment Plans (SIPs) in mutual funds and fixed deposits. So, make a wise decision and protect your family’s financial well-being with a ULIP investment plan.