5 reasons to stay invested in your ULIP!

Date 06 Jul 2023
Time 5 mins read
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Rated by 236 readers

As you already know, your ULIP plan is one of the best all-rounders in the world of investments. In this blog post, we'll dive deeper into the benefits of your ULIP plan and give you five compelling reasons why staying invested in your ULIP is a wise decision.

1. Score Compounding Returns

One of the key benefits of your ULIP is the opportunity it gives you for compounding your returns. With ULIP, professional fund managers invest your money into various funds based on your risk appetite. The power of compounding allows your investments to grow steadily over the long term. This means, the longer you stay invested in your ULIP plan, the more it grows, resulting in generating potentially higher returns.

2. Create Wealth by Switching

A super-useful aspect of your ULIP is its cost-effective Switching feature. Your plan gives you the flexibility to adapt to changing market conditions or personal needs. By efficiently switching between high-risk and low-risk funds, you can easily optimize your investment strategy and make informed decisions to enhance your wealth.

3. Enjoy Triple Tax Benefits*

Did you know that your ULIP offers triple tax benefits? For starters, your premium is eligible for tax deductions (up to Rs. 1.5 lakhs) under Section 80C^ of the Indian Income Tax Act. Your withdrawn corpus is also tax-exempted under Section 10(10D)**, (provided you have remained invested for the lock-in period of 5 years). And finally, your maturity benefit is tax-exempted under Section 10(10D)** of the Income Tax Act. Staying invested in your ULIP for a long period can help you enjoy all three benefits while growing your wealth.

4. Remain Dependable with Insurance

One of the standout features of your ULIP is the added layer of financial security it provides for your family. Your ULIP ensures that your loved ones receive substantial maturity benefits, along with insurance coverage. Being committed to your plan can result in an amount which is often around 120 times your monthly investment. This financial protection brings peace of mind and acts as a safety net for your family's future.

5. Benefit from Long-Term Wealth Creation

Your ULIP is designed in a way that helps you with long-term wealth creation. By staying invested, you align yourself with the core purpose of your plan and give your investments the time they need to grow. Over the years, you can build a sizable corpus that can help you achieve your financial goals, whether it's funding your child's education, buying a dream home, or planning for a comfortable retirement.

Final Thoughts

There you have it - five good reasons to stay invested in your ULIP. As a current ULIP investor, you've already taken the right step towards securing your financial future. By staying committed to your ULIP investment, you can unlock its full potential and reap the benefits it offers. Remember, the journey of wealth creation requires patience and perseverance. Stick with your ULIP, and you'll be on the path to financial success.

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FAQs

How does a ULIP work?
When you invest in a ULIP, a portion of your premium goes towards providing life insurance coverage, while the remaining amount is invested in various investment funds of your choice, such as equity, debt, or balanced funds.
What are the key benefits of investing in ULIPs?
ULIPs offer several benefits, including life insurance coverage, the potential for wealth creation through market-linked returns, flexibility to switch between investment funds, tax benefits on premiums paid and maturity proceeds, and the option to make partial withdrawals.
Can I withdraw the funds from my ULIP plan after the completion of the lock-in period?
Yes, you can withdraw the funds from the ULIP plan after the completion of the lock-in period. The maturity proceeds are tax-free under Section 10(10D)** of the Income Tax Act, 1961.
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  • Disclaimer

    *Tax benefits are subject to changes in tax laws. Kindly consult your financial advisor for more details.
    ^Under Section 80C of the Indian Income Tax Act, the premium you pay for your ULIP is eligible for tax deduction up to Rs. 1.5 lakhs in a financial year.
    **Sec 10(10D) benefit is available subject to fulfilment of conditions specified therein. As per Section 10(10D) of the Income-tax Act, 1961, proceeds from Unit Linked Life Insurance policies issued on or after Feb 1, 2021, shall be taxable as income from other sources if the cumulative annual premium payable by taxpayer for such life insurance policies exceeds ₹ 2.5 lakhs.
    Trade Logo "Aditya Birla Capital" displayed above is owned by ADITYA BIRLA MANAGEMENT CORPORATION PRIVATE LIMITED (Trademark Owner) and used by ADITYA BIRLA SUN LIFE INSURANCE COMPANY LIMITED (ABSLI) under the license.
    Aditya Birla Sun Life Insurance is only the name of the Company and do not in any way indicate the quality, future prospects or returns. The name of the funds offered does not in any way indicate their quality, future prospects or returns. In ULIP plans, the investment risk in the investment funds chosen by you is borne by you. Investment funds are subject to investment risks and unit prices may go up or down reflecting the market value of the underlying assets. Past performance is no guarantee of future results. The charges are guaranteed throughout the term of the policy unless specifically mentioned and subject to IRDAI approval. The value of the investment fund reflects the value of the underlying investments. These investments are subject to market risks and change in fundamentals such as tax rates, etc affecting the investment portfolio. The premium paid in unit linked life insurance policies are subject to investment risk associated with capital markets and the unit price of the units may go up or down based on the performance of investment fund and factors influencing the capital market and the policyholder is responsible for his/her decisions.  GST and any other applicable taxes levied as per extant tax laws shall be deducted from the premium or from the allotted units as applicable. Tax benefits are subject to change in the tax laws. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document. The Past performance of the Unit linked fund(s) of the company is not necessarily indicative of the future performance of any of these Unit linked fund(s). Linked Life insurance products are different from the traditional life insurance products and are subject to the risk factors.
    IN THIS POLICY, INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICY HOLDER.
    Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policy holder will not be able to withdraw/surrender the monies invested in Linked Insurance Products completely or partially till the end of the fiſth year from inception. For more details, please refer to your policy contract.
    Aditya Birla Sun Life Insurance Company Limited
    Write to us at
    Customer Service, Aditya Birla Sun Life Insurance Company Limited, G Corp Tech Park, 6th Floor, Kasar Wadavali, Ghodbunder Road, Thane - 400601.
    Registered office
    Aditya Birla Sun Life Insurance Company Limited, One World Centre, Tower 1, 16th Floor, Jupiter Mill Compound, 841, Senapati Bapat Marg, Elphinstone Road, Mumbai - 400 013 | +91 22 6723 9100 | CIN: U99999MH2000PLC128110 | IRDAI Regn. No. 109
    BEWARE OF SPURIOUS / FRAUD PHONE CALLS!
    IRDAI is not involved in activities like selling insurance policies, announcing bonus or investment of premiums. Public receiving such phone calls are requested to lodge a police complaint.
    ADV/7/23-24/905