The IRDA has made it mandatory for life insurers to provide policyholders customised benefit illustrations that project their corpus at various stages assuming gross investment returns of 4% and 8%, according to an article published in The Economic Times in November 2015. ULIPs are unique life insurance products that offer you the twin benefits of insurance and investment. These are products in which a part of the premium goes towards funding the life cover, while the rest is invested in market-related assets, such as debt, equity and money market instruments.
ULIPs: Features and Benefits
A ULIP plan is apt for individuals who want an insurance cover but would also like to invest their money for higher returns and build a corpus. ULIPs help you achieve both objectives under the same product. The fact that you can choose the securities you wish to invest in makes them all the more attractive. As these products invest in different types of securities (debt, money market instruments and equities), they are suitable for investors with varied risk profiles. A ULIP is a long-term product that can help you save for your retirement or even children's education.
It is a smart investment choice as you can switch between funds without attracting any costs, unlike in the case of mutual funds. Every plan offers few free switches per year. Also, when you switch funds, there is no case of capital gains and consequently no capital gains tax. The goal of the policy remains intact even when the policyholder is not there anymore. When the policyholder expires, the fund value is paid and the sum assured is paid upon maturity of the policy. You can also avail tax benefits of up to Rs. 1.5 lakhs on premium payments per year under section 80 C of the Income Tax Act.
Choosing the Best ULIPs
Find out about the performance of the plan before you invest in it. While ULIPs are cost effective and offer various benefits, the performance of the funds may vary and this would impact the maturity payout. So, check the track record of the fund before making a choice.
The Aditya Birla Sun Life Wealth Assure Plan is one of the best ULIP plans in India. It offers you death benefit, maturity benefit and guaranteed additions which are added to your policy in the sixth year after commencement. You can also avail partial withdrawals in the event of an emergency.