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Unit-Linked pension plans are best for long-term financial goals

Tuesday April 04, 2017,

4 min Read

Unit Linked Insurance Plans are market linked products that combine both insurance and investment. The ULIP plans allow you to enjoy a life cover as well as provide you an opportunity to earn market linked returns. For those buyers who are nearing retirement and who want to avail the dual benefits investment cum insurance backed up by flexibility, Unit linked pension plan are the best investment option for them.

As per the risk appetite, the ULIP plans link to the capital market and provides flexibility to invest in depth or equity. The unit linked pension plan in India is amongst the most productive option to choose for investment. As a long term investment options, there are several reasons why investing in ULIP plans are beneficial.

Benefits offered by ULIP’s retirement plan that makes them a profitable investment option

1. ULIP plans are most transparent in nature.

2. These plans offer great features in minimum charges.

3. ULIP plans provide flexibility to switch over funds.

4. It has different premium paying frequency.

5. ULIP’s offers rider options for additional coverage.

6. Tax benefit under section 80C, 80D and 10D.

Here we have discussed briefly some of the points, to validate the benefits offered by ULIP plans.

• Offers a Wide Choice of Investment Options-

Based on the risk appetite of the customers, ULIPs provide a range of investment options. According to one’s own preference, you can choose to invest your money in-depth funds or in pure equity market or a combination of both. Along with a wide choice of investment, it also provides you with an opportunity to switch between fund options without any additional expenses. In the annual targeted premium, ULIPs provides flexibility to choose the investment ratio and the sum assured.

• Transparency-

ULIP plans are extremely transparent in nature. The value of the investment, the charge structure and the expected IRR based on 4% and 8 % rate of return, for the complete term of the policy are shared with the customers before they buy a product. The insured can track their portfolio performance and can know how and where their money is invested. Moreover, one can also get updates about all the applicable charges as well as the net investment amount.

• Flexibility-

In most of the cases, ULIPs offers you an option to choose the life cover and the desired premium amount. The customers have the flexibility to choose between equity and depth. Besides, most of the insurance companies allow a certain number of free switches. To avail investment opportunity offered by own income flow or external environment, the ULIP retirement plans offers the flexibility of one-time increase in investment portfolio through top-ups.

• Liquidity-

To deal with unforeseen circumstances and any type of emergency situation, ULIPs offers the advantage of partial withdrawal under which after five years, you can withdraw the funds from the unit linked account retaining only the specific minimum amount. In a case of any emergency, one can surrender the policy without any additional cost of charges.

• Tax Benefit-

An investment up to Rs 1,00,000 is exempted from tax deduction under section 80C and the proceeds which will be received on maturity will be tax-free under section 10D of income tax act.

• Disciplined and Regular Saving-

Unit Linked pension plans helps you to inculcate a regular saving habit. Moreover, the average unit costs tend to be lower than one-time investment. For a long term investment, ULIPs are an outstanding solution for one-time cover. It provides the benefits of various investment opportunities along with the tax benefits.

• Financial Goal is Protected-

ULIPs offer customers a choice to capitalize on various investment tools like bonds, stocks and mutual funds as well as insurance cover. The double benefit of protection combined with the freedom to choose your investment avenue makes ULIPs a truly popular financial instrument among customers.

With enhanced customer value, ULIP plans have certainly emerged as a vital long-term protection and saving vehicle.