Finance

How ULIP Helps Manage Your Wealth during COVID-19

The world economy has been greatly affected by the on-going global pandemic. Businesses across the globe are said to suffer from the pandemic for at least the next few years. This volatility is most likely to continue until we reach a manageable state to control the spread of the disease.

During such times, many people are worried about their investment portfolio, which is quite understandable. When the money is tight, and the market is at its all-time low, investors can be worried to make any future investments. 

The situation in India is no different. But market fluctuations are normal. Over the years, we have observed that the markets in India and other countries have recovered and gained the confidence to bounce back stronger. This shows that if you have investments made beforehand, continue contributing towards it. Moreover, you can also begin investing now.

But what investment option should you choose? In this article, we will be discussing how ULIP helps manage your wealth during a pandemic. But before that, let us understand what ULIP policy is.

What Is ULIP Policy

ULIP or Unit Linked Insurance Plan is an insurance product that offers the benefits of investments. The policy offers dual benefits of life insurance coverage and wealth creation via market-linked funds.

How ULIPs help in managing wealth during a pandemic

 

  • ULIPs offer flexibility option to its policyholders

 

You can invest in equity funds, debt funds, or a combination of the two. It is advisable to make investments based on your risk appetite. If you have a low-risk appetite, invest in debt funds. For those with a high-risk appetite can choose to invest in equity-oriented funds.

However, for those of you who think that their investment portfolio is not earning reasonable returns, ULIP offers a unique facility to manage the same. You can choose the fund switching option to switch between equity and debt and vice versa. Use the fund switching facility to improve your portfolio and yield high ULIP returns.

 

  • ULIPs offer two-fold benefits

 

Much like any other insurance product, ULIPs have certain tax benefits as well. The premiums paid towards the policy can be claimed for tax deductions under Section 80C of the old tax regime. Besides this, the maturity and death benefits received on ULIP policy are tax-free under Section 10(10D) of the Income Tax Act, 1961. That way, you can save tax while earning market returns on ULIPs. 

 

  • ULIPs perform the best in the long run

 

Since the ULIP returns are dependent on the market performance of your funds, it is practical to be invested in ULIP for a long time. In addition, because of this reason, ULIPs have a lock-in period of five years. 

We understand that the market condition right now is a little down, but it is bound to improve in the near future. The fund value of your investments will be much greater than compared to what it is right now. 

Hence, investing in long-term ULIPs is a sound financial decision.

In the end

ULIPs are also known as goal-based investment plans. Hence, you need to be aware of the financial objectives that you plan to achieve in the future. Whether you want to save your child’s future, your retirement, or short-term goals like buying a house/car – there are different ULIP plans to achieve them all. Be it a pandemic-like situation or any other day in your life, if you want to build your wealth over time, ULIPs are your ideal choice. 

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