What To Know About ULIPs Before You Buy One

Recent post

In these worrying times of a global epidemic, it’s paramount to have economic plans that can protect you and your family financially in the unfortunate event of your absence.

Focusing on long-term wealth growth can help with the former while purchasing a life insurance policy can help with the latter.

ULIPs, also known as unit-linked insurance plans, are a single investment vehicle that can assist investors in achieving both goals.

An investment approach called a ULIP aims to benefit both insurance and also investment provisions. The investor’s investment funds, which may include a range of asset types, are chosen using the policy premium. For this product, “Sections 80C and 80 CCD of the Income Tax” Act also offer significant tax advantages. Under section 80 CCD of the new tax legislation, the amount promised or the maturity proceeds for plans with a premium of up to Rs 2.5 lakh are tax-free. In contrast to many financial products that are subject to capital gains tax, intra-fund transfers in ULIPs are tax-free. You can use the ULIP calculator to find out more about the plan and better comprehend it.

Before investing in a ULIP, take the following factors into account:

Select the largest sum guaranteed.

If the policyholder’s while passes while the ULIP is still in effect, the lump-sum reward, which is disclosed at the time of shop, is promised to them. Because the family would be supported in the terrible event of the policyholder’s passing, it is advised to choose a sizeable sum that is insured. ULIP policies with a return of charge offer the advantage of the mortality premium in the unfortunate event that the policyholder passes away too soon.

Additional charges were made

The administration of policies, distribution of premiums, fund management, top-up costs, mortality fees, switching fees, rider fees, termination of premium payments, etc. are some examples of typical ULIP fees. These costs are not needed to be paid by all insurance carriers; some even reimburse the sum for each group. Make sure you are informed of all the costs prior to calling an insurance company. Before acquiring the ULIP Policy Plan, a policyholder should be fully informed of all fees and how they may affect future returns. Modern ULIPs charge substantially lower costs.

The insurer’s standing and financial stability

Considering that ULIPs are long-term investments, it is crucial to research the legitimacy and standing of the insurance provider before making a decision. Strict rules must be followed by insurance companies, and the regulator ensures that all businesses do as well. The solvency ratio, a reliable measure of how financially solid insurance is, determines a company’s capacity to repay long-term debt.

According to your objectives and level of risk tolerance, you should adjust your asset mix.

Risk-averse policyholders can be respectably replaced with debt funds, whereas risk-taking investors prefer stocks. Another way to adopt a more objective stance( i.e., an investment that combines equities and debt) is to invest in an opportunity that offers both. For more details, consult the ULIP calculator.

Compare and choose your things carefully.

Make careful to compare features and look into all the options before choosing a ULIP package. Examine the underlying funds for the products, paying special attention to their goals and performance history.

A wonderful way to meet your insurance and financial needs and advance your goals could be to choose from among the many ULIP plans that are now on the market. These plans also provide chances for tax savings, various investment portfolio techniques, and flexible options for asset allocation. Be sure to comprehend all of the ULIP tax advantages before making a purchase.


ULIP plans have long stood the chosen investment alternative, particularly for younger Indians in their 20s and 30s. They are simple to use and comprehend, and they provide a wide range of risk-and-return options. Investors claim that by encouraging them to save and teaching them about their spending patterns, their ULIP coverage provides them with long-term benefits. The technique also produces consistent profits, which is advantageous for young people who are just starting out. Before selecting your plans, keep in mind to learn more about the plans and the ULIP tax benefits.

The solicitation addresses insurance. Please carefully read the sales brochure or policy’s wording before making a purchase to get more information on the advantages, restrictions, and other terms and conditions.