5 Things to know about Unit Linked Insurance Plans (ULIPs)

5 Things to know about Unit Linked Insurance Plans (ULIPs)


Life is a struggle. We strive through each day to make our dreams come true. Be it the hassle of finding a seat in the metro or bus to reach our offices or giving enough time and efforts to get recognized at work. Every day is a flight to achieve something.  Similarly, as a parent, you wish the best for your child. You work hard throughout your life to fulfil your child’s dream of education and other financial desires. Although, to accomplish these goals, you would always need an investment option that helps you earn higher returns in the long run. Many are opting for various investment options including Unit Linked Insurance Plans. This article would help to know a few things about Unit Linked Insurance Plans (ULIPs).

Also Read: Frequently Asked Questions about ULIPs

What are ULIPs?


A Unit Linked Insurance Plan or ULIP is a market-linked instruments that offers potentially higher returns along with protection. Thus, anyone who is looking for the fulfillment of long-term goals like buying a house, opening a start-up, child’s marriage, etc., are now opting ULIP as one of the options.

5 Things to know about Unit Linked Insurance Plans (ULIPs)


Let us check more about ULIPs now.

1) Switch between funds – ULIPs allow you to enjoy the benefits of switching funds. You can choose to switch between funds depending on your risk appetite and financial goals. It helps investors to make a choice between debt funds, equity funds or balanced funds as per the market situation. Just stay invested for the long run if you are willing to earn high returns.

2) 5-year lock-in-period – The best part about ULIP is that it comes with a lock-in period of 5 years. It will keep you invested for a longer period. But, if you surrender the policy during this period, then you will not be receiving any payouts. Partial withdrawal facility is only allowed once the 5-year lock-in period is over.

3) Tax benefits – This is yet another benefit of buying a ULIP plan. You can enjoy tax benefits on the premium that you pay towards the policy as per Section 80C of the Income Tax Act. Also, returns from the maturity of the ULIP policy are exempt from tax as per Section 10D of the Income Tax Act.

4) Flexibility to choose funds – ULIPs come with various funds to choose from. Its flexibility feature helps you earn better returns in a long run as you cannot assess the performance of ULIP funds in a short period. This includes equity funds, debt funds or balanced funds. Investors can choose one fund based on their risk appetite and financial needs.

5) Allocation Charges: ULIPs issued earlier in 1990’s had high premium allocation charges. One should consider various charges before opting ULIPs

You need to identify financial goals up front. Based on such financial goals, you can plan in investing various investment options. Based on the features indicated for ULIPs, if you feel these would fit you best, then you can opt for ULIP.

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Suresh KP

Things to know about Unit Linked Insurance Plans (ULIPs)

Suresh KP

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