How Flexible Are ULIPs?

Are you looking to create certain long-term wealth for you and your family? Selecting investments to broaden your portfolio is a great idea to accomplish this goal. But it can be a little difficult to choose the investments that are right for you. You may be looking for something that is fast maturing or something low risk. If you’re looking for something that is flexible, a ULIP may be just what you need. They are budget-friendly, time saving and profitable. Check out some of the flexibility that comes with choosing ULIPs.

Flexible Risk Management

When you pair your life insurance with your investment portfolio, you are giving yourself a two in one package. The best part is that you have the ability to mitigate how much of a risk you want to take on. A single policy allows for high, medium and low risk options. You can also switch between equity and debt fund options and not be burdened with fees associated with the number of changes you make. However, how much risk you decide to take on you can choose the sum assured amount as well as the investment ratio. Another bonus allows you to top-up so that you can take advantage of external investment opportunities or increases in your income.

Liquidity

Sometimes you need to gain access to money that you have tied up in investments. One of the advantages to a ULIP is having the option to partially withdraw funds. A partial withdrawal will not close out your unit linked account, but it will give you what you need for funeral expenses, home repairs and anything else that comes your way. It is important to note that different insurers will offer different terms for how often you can withdraw from the account and any associated fees.

Taxes

Taxes are a certainty that we can all agree upon. And a ULIP can help save you tax monies. There are tax advantages that come with the different stages of your insurance policy. Not only can you take advantage of the tax benefits as written in the Income Tax Act, 1961, through the term, but you can also avail them at the maturity of the policy. You can deduct the amount that you have invested. The maximum deductible amount is Rs. 1, 50, 000. It should also be noted that what you receive at the time of maturity is not taxable. You can even save tax on withdrawals. Although mutual funds are taxable, you can protect your savings with the ULIP. 

With the right insurer, your ULIP can offer annual account statements, a quarterly investment portfolio and daily NAV reporting so you can stay on top of your portfolio’s status and make any necessary adjustments. Be sure to fully read and understand your policy and plan before signing any documents, as fees, conditions, interest and other factors will differ from company to company. Don’t be afraid to take the necessary steps to ensure that you have what you need to have a brighter and more carefree future.