Why Investing in a ULIP is Perfect Sense

With a few years of working in a professional career, chances are quite high that you would be thinking of investing in a few funds to ensure that you have a better return on investment in the future. There are tonnes of ways you can do this, but choosing the best method to get a return is most important. One of the best places for you to make an investment is a ULIP. Many of us need to know what the benefits are

What is ULIP? It is an insurance plan in which you can play the premium and that is invested in many instruments. It can be towards equity, debt or any other money market instruments too. The biggest benefit of investing in this is that the premium that you are putting in does become completely exempt from tax. That is such a huge advantage when it comes to buying an investment. Not only does it give you huge returns in the future but it also gives you tax savings. Of course the maximum that you can invest in a plan like this is Rs 1.5L and this is deductable from your taxable income as per U/S 80c.

There are advantages no doubt when you invest in a ULIP policy and these make out to be a sure shot reason to place your money here.

1. The sheer flexibility you have by switching between equity and debt: Undoubtedly most of the insurance policies you invest in allow you to switch in funds at least a few times a year but it is free in cost in such an investment. Moreover when you are switching between funds, there is no real capital gain component and hence it does not attract a tax towards it. This does make it attractive and convenient too.
2. The tax deduction is a huge benefit too. You can invest a healthy amount that would be tax free.

3. You need to remember that any of the ULIP Plans are a long term product and hence you need to be committed to it. You should know that it is not a short term investment and that you would be making a return on commitment over a long term.

Most of us want to choose investments because it does give you a healthy return but patience and discipline is key when you are planning to make a good return. That is one of the reasons many of us must choose Unit Linked Insurance Plan and look at it as a long term investment. You would definitely find a lot of benefits as you invest more on a plan like this and undoubtedly you would want to increase your investments here. If you have been thinking about making an investment, there is no time that is better than right now. Not only would you be making a great start to your investment cycle but also be sure of the returns you would have in the future. In such a competitive market where you have to be aware of all the latest trends, nothing would match up to taking up an investment like this.

Ashwini is a passionate financial advisers from Mumbai, India. She has wide range of interest including online writing, stock markets etc. However, she likes to share her own experience in the fields of mutual funds