With the reforms in Long Term Capital Gains Tax (LTCG), Unit Linked Insurance Plan (ULIP) have topped the lists of the favorite investment options available in the market. This is because of ULIP’s dual benefits of investment and insurance that work in favor of investors. These policies not only offer protection to the families of the investors but also allow the participation of the investors in equity markets.
Being a market-linked product, ULIPs have an upper hand in the insurance markets for their numerous benefits. Few of the major advantages that investment in ULIPs offers is high returns and low costs. In addition to this, ULIPs are also known for providing investors with the highest tax saving benefits. So if you’re wondering when to invest in a ULIP at the time of market volatility, then keep reading to find out more:
When to invest in a ULIP Plan?
- When you wish to receive higher returns
Being a market-linked product, a ULIP Policy, unfortunately, cannot provide you with a stable performance throughout the due course. However, the brighter side of investment is that ULIP returns are some of the highest amongst market-linked investment options. A ULIP Plan promises higher returns based on your risk appetite and the scenario of the market. For instance, when the markets are doing well, you can yield high returns by investing in equity funds, and vice versa.
- When you wish to save taxes
Another advantage of looking forward to investing in ULIPs is their tax saving benefit. Under section 80C of the Income Tax Act, 1961, the investment made towards a ULIP Plan is eligible for deductions. Moreover, the earned money from the investments is also exempted from the payment of taxes as per section 10 (10D).
- When you wish to switch funds
Unlike mutual funds, every ULIP Policy is keen on providing all the investors with a switching option. When you invest in ULIPs, you are given the freedom to select from the multiple fund options that are available in a ULIP Plan. Typically, the fund options are equity funds, debt funds, and balanced funds. Make the selection and switches of these funds based on your allocation of funds and appetite for risk.
- When you wish to obtain ROMC
If you’re someone who wishes to obtain the benefits of Return on Mortality Charge (ROMC), then invest in a ULIP Policy. With the help of ROMC, the premium payments in a ULIP Policy include a mortality charge that covers the expense of a life cover. After the policy matures, the investor will receive the entire sum of mortality charge that acts as a free life coverage.
- When you wish to receive additional benefits
Apart from the coverage that acts as a one of the major ULIP benefits, there are other numerous advantages provided by this policy for the betterment of the investors. One such additional benefit offered by a ULIP Policy is the ‘return enhancer’ benefit. The return enhancer benefit is provided to those investors who wish to receive maturity benefits in the form of installment. Further, the rate of this installment goes up to a level of 0.5%.
Market volatility is surely scary to all the investors. But with the right plan, you can overcome the fear of volatility. Therefore, before you get carried away with panic, invest in ULIPs for security purpose for a longer run.
Now that you know how to invest in a ULIP during volatile market scenarios, purchase a ULIP Policy to the soonest. With the help of ULIPs, you will enjoy the benefits of owning multiple fund investments even at times when the market is unstable. All you have to do is select the right plan from the right insurance company and you are good to go.