What’s the fuss about ULIPs? Find out!
Ulip is an investment policy with an insurance component that can provide you with the best of both worlds—capital growth and tax benefits. In this article, we look at how Ulips can help you build wealth while saving too!
Let’s begin! ULIPs have been around since 2000, but their popularity has picked up only recently. Why?
Because they are awesome policies that can help you build wealth while saving as well! How? Here are 8 ways Ulip provides you the option to build wealth while saving too. Ready? Let’s begin!
#1. Higher Returns
Some of these products come with higher returns, which also means you can accumulate more wealth by investing a fixed amount of money for a longer period.
For instance, if your investment grows 20 percent per year and you reinvest it, then in about 15 years your investments would double up. The longer you stay invested in these plans, the better your chances are to accumulate wealth over time.
#2. Tax Benefits Under Section 80C
One of India’s most misunderstood tax rules, Section 80C, allows you to save up to Rs 1,00,000 per annum under various heads: medical insurance, life insurance premium (only for senior citizens), long-term health insurance, and so on.
The rules do change slightly every year; find out how. This is a question you must answer before investing in any financial product—and that includes investments like mutual funds, bonds, stocks, and more. Find out what qualifies as a long-term investment here.
#3. Ease Of Investing In Mutual Funds
Mutual funds make it easy to invest in securities that are not traded on any exchanges or over the counter.
There are hundreds of mutual funds across all classes, from large cap to mid-cap to small cap and everything in between.
The market may be down one day and up another, but mutual funds ensure that your investment will not fluctuate beyond a certain limit or fall below a floor value. However, if you need immediate access to your money, mutual funds will not help you.
#4. Comparison With Other Investment Options
Many people choose to invest in a unit-linked insurance plan (ULIP) because they want insurance coverage in case of an unforeseen situation, as well as long-term wealth creation.
But investing through any other asset class can also provide similar benefits, albeit with different risk-reward trade-offs. Here’s how some popular investment options stack up against a ULIP
#5. Government’s Financial Inclusion Campaign
The Pradhan Mantri Jan-Dhan Yojana—the flagship financial inclusion scheme of the Government’s Financial Inclusion Campaign—has been launched to provide financial services like bank accounts and RuPay debit cards to all households.
It has been launched in association with large private banks, as well as cooperative and regional rural banks. The scheme will ensure access to these financial services through any of these channels so that no one is left behind.
#6. Loans From Banks
Banks and non-banking financial companies (NBFCs) provide loans for property, education, and sometimes for health insurance. To figure out how much you can borrow from a bank, you’ll need to get a copy of your credit report from one of two credit bureaus: Experian or TransUnion.
Borrowers with good credit scores—in other words, those who pay their bills on time—can typically borrow between 20% and 50% of their available credit line. If you don’t have a lot of savings but want to buy an expensive asset like a house or car, consider taking out both an auto loan and a home loan at once—it will be easier to qualify for them together than individually.
#7. Low Expense Ratio
All life insurance plans, by law, must have a minimum expense ratio of 1.5%. That means for every 100 rupees you invest in a plan, it will cost you an extra 15 rupees in expenses. With ULIPs however, that expense ratio is usually significantly lower.
Some policies boast expense ratios as low as 0.25%, which is almost half of what other plans charge. Since ULIPs are considered long-term savings products, any returns or gains from your investment are tax-free (at least until you withdraw them).
This makes them ideal for investors looking to maximize their returns over time—particularly those who may be saving up for something big like a house or retirement. #9.
#8. Flexible Spending And Savings Options
You can take advantage of flexible spending accounts (FSA) and/or health savings accounts (HSA). An FSA is an account that allows you to set aside pre-tax money for healthcare expenses, including medical costs and insurance premiums.
The great thing about FSAs is that you can use your funds to pay for qualified expenses, meaning there’s no need to use your after-tax income.
Canara HSBC Life Insurance is a team of insurance experts who are here to help you find the right coverage at the right price. Canara HSBC Life Insurance understands that every individual and family is different, which is why we offer a wide range of options when it comes to protecting what matters the most to you and your family. Let us help you find the right balance between cost and coverage so that you can rest easy knowing that your loved ones will be taken care of no matter what happens in life.
There are many ways to create wealth and one of them is through building your own business, however starting up any business needs a lot of money, time, and effort to get things moving. One other way to create wealth is through investing in stocks, bonds, gold, or silver which require you to keep the investment for the long run. ULIPs (Unit Linked Insurance Plans of Canara HSBC Life Insurance) provide you an option to build wealth while saving too.