If you are looking for an investment plan that combines the benefits of insurance and investment, ULIP plans are a great option to consider. ULIP, for Unit-Linked Insurance Plan, is a hybrid product offering the dual benefits of insurance and investment under a single plan. This investment-cum-insurance plan has gained immense popularity in recent years owing to the benefits it offers. This blog will examine the ULIP plan, its features, benefits, and the best ULIP plans in the market.
What is a ULIP Plan?
A ULIP plan is a financial instrument that combines the advantages of both insurance and investment. The policyholder pays a premium, a part of which goes towards providing insurance cover, while the remaining amount is invested in various funds as per the policyholder's choice.
ULIP plans in India are a flexible investment option, and the policyholder can choose from various investment funds, such as equity, debt, balanced, and so on. The returns on the investment are based on the performance of the chosen fund.
Features of ULIP Plans:
- Insurance cover: ULIP plans in India offer life insurance cover, which provides financial protection to the policyholder's family during their untimely demise.
- Investment options: ULIP plans provide a variety of investment funds, such as equity, debt, balanced, etc., to choose from.
- Flexibility: These plans offer flexibility regarding premium payments, fund switches, and partial withdrawals.
- Tax benefits: ULIP plans in India provide tax benefits under Section 80C of the Income Tax Act, 1961, and the policyholder can claim tax benefits on the premium paid, subject to certain conditions.
- Lock-in period: They come with a lock-in period of five years, which ensures that the policyholder stays invested for a longer duration and reaps the benefits of long-term investment.
Best ULIP Plans In the Market
HDFC Life Click 2 Wealth
HDFC Life Click 2 Wealth is a ULIP plan that offers multiple fund options, including equity, debt, and balanced funds, to choose from. The plan also offers an opportunity to switch funds without any charges. The plan has a minimum premium of Rs. 24,000 annually and provides tax benefits under Section 80C of the Income Tax Act.
ICICI Prudential Wealth Builder II
ICICI Prudential Wealth Builder II is another ULIP plan that offers multiple fund options, including equity, debt, and balanced funds, to choose from. The plan also provides an opportunity to switch funds without any charges. The plan has a minimum premium of Rs. 48,000 annually and offers tax benefits under Section 80C of the Income Tax Act.
SBI Life Wealth Assure
SBI Life Wealth Assure is a ULIP plan that offers a choice of six investment funds, including equity, debt, and balanced funds. The plan has a minimum premium of Rs. 50,000 annually and offers tax benefits under Section 80C of the Income Tax Act. The plan also offers an option to switch funds without any charges.
Max Life Fast Track Super Plan
Max Life Fast Track Super Plan is a ULIP plan that offers a choice of six investment funds, including equity, debt, and balanced funds. The plan has a minimum premium of Rs. 50,000 annually and offers tax benefits under Section 80C of the Income Tax Act. The plan also offers an option to switch funds without any charges.
Bajaj Allianz Future Gain
Bajaj Allianz Future Gain is a ULIP plan that offers a choice of eight investment funds, including equity, debt, and balanced funds. The plan has a minimum premium of Rs. 25,000 per annum and offers tax benefits under Section 80C of the Income Tax Act. The plan also offers an option to switch funds without any charges.
Tata AIA Life Insurance Wealth Maxima
Tata AIA Life Insurance Wealth Maxima is a ULIP plan that offers a choice of eight investment funds, including equity, debt, and balanced funds. The plan has a minimum premium of Rs. 50,000 annually and offers tax benefits under Section 80C of the Income Tax Act. The plan also offers an option to switch funds without any charges.
Factors to Consider before Choosing a ULIP Plan
- Fund options: Before investing in a ULIP plan, it is essential to consider the investment options available and choose the funds that suit your investment goals and risk appetite.
- Charges: ULIP plans in India come with various accounts, such as premium allocation charges, mortality charges, fund management charges, and so on. It is essential to consider these charges before choosing a plan.
- Flexibility: Look for a ULIP plan that offers flexibility regarding premium payments, fund switches, and partial withdrawals.
- Returns: Check the historical performance of the funds provided by the ULIP plan and choose a plan with a track record of generating good returns.
- Insurance cover: Consider the insurance cover offered by the ULIP plan and choose one that provides adequate financial protection to your family.
ULIP vs Mutual Funds: Which One is Better?
ULIPs and mutual funds are two popular investment options that offer market-linked returns to investors. However, they are not the same.
ULIPs, or Unit-Linked Insurance Plans, combine insurance and investment. When you invest in a ULIP plan, a part of your premium amount goes towards providing life cover, while the remaining amount is invested in the funds you choose. ULIP plans in India offer a range of benefits, such as market-linked returns, tax benefits under Section 80C of the Income Tax Act, flexibility, and life cover.
On the other hand, mutual funds are investment products that pool money from investors and invest it in a portfolio of stocks, bonds, and other securities. Mutual funds offer market-linked returns and are managed by professional fund managers. However, they do not provide any life cover or offer tax benefits under Section 80C of the Income Tax Act.
Conclusion
ULIP plans are a great investment option that offers the dual benefits of insurance and investment. The best ULIP plans in India offer various investment options, flexibility, tax benefits, and adequate insurance coverage. Before investing in a ULIP plan, it is essential to consider the fund options, charges, flexibility, returns, and insurance coverage the plan offers. Thus, you can find the best ULIP plans in the market that meet your investment goals and financially protect your family.
Disclaimer
The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.