Unit Linked Insurance Plans or ULIP Plans are insurance policies that provide the opportunity for wealth growth while also offering the security of a life insurance policy. In a ULIP, a portion of your premium amount is allocated to your Life Cover, while the remainder is dedicated to a common pool of money known as a fund. This fund invests in equities, debt, or a mix of the two. The returns on your investments are determined by the success of the fund you choose. The ULIP meaning and significance in each person's life may be different depending on their investment portfolio, but they are definitely one of the most advantageous investment plans to choose from.
ULIP Meaning and Significance
At its core, ULIP meaning encapsulates a unique investment strategy. A portion of your premium contributes to your life cover, providing financial security, while the remaining funds are invested in equities, debt, or a combination of both. The returns on your investments are linked to the performance of the chosen fund. ULIPs stand for Unit Linked Insurance Plans, highlighting the unitized structure where each unit represents a portion of the fund.
Understanding the ULIP meaning is pivotal for realizing its potential as one of the most advantageous investment plans available today. Let's explore the key benefits that make ULIPs a lucrative choice.
Understanding the ULIP meaning helps you understand its benefits and helps you realize how it can be one of the most lucrative investment options available today.
Now that you know what is a ULIP, let's take a look at its benefits and try to understand the meaning of ULIP in detail.
Benefits of ULIP Plans
Freedom to Select Your Life Cover
Investing in Unit Linked Insurance Policies means having the option of selecting the amount of Life Cover that you require. The minimum life cover given by most ULIPs is ten times your yearly premium amount.
The Ability to Select your Investment Type
Investing in a ULIP means having the ability to select your investment type. There are three main types of funds: equity funds and debt funds and a hybrid of the two known as balanced funds. Equity funds involve investments such as the purchase of stocks. Debt funds are those funds that invest in debt instruments. Finally, balanced funds invest in both equities and debt funds.
ULIP plans allow you to invest in a variety of funds based on your goals and risk tolerance. For example, if you want to increase your wealth and are willing to take a risk with your investment, you can go for equity funds. On the other hand, if you want to receive consistent returns on your investment, you may put your money into debt funds.
You may also use the switch option to transfer money between equity and debt funds. Most insurance policies include a set number of free switches each year, with a small fee applied for switches beyond that.
Liquidity
Unit Linked Insurance Plans (ULIPs) have a partial withdrawal option that can be made only after the lock-in period. This option allows you to withdraw a part of the money invested in your policy. This allows you to cater to expenditures such as your child's 10th, 12th, or college admission fees, travelling on a family trip, in case of an emergency, and so on. In addition, partial withdrawals are often free of charge.
Goal-based Planning
ULIP plans are designed to assist you in achieving your key financial objectives, such as wealth development, retirement planning, or saving for your child's education. In addition, these plans also provide the added benefit of knowing that your premium is contributing towards your long-term objectives.
Tax Advantages
Under Sections 80C and 10 (10D) of the Income Tax Act of 1961, currently, investing in a ULIP allows you to save tax on your hard-earned money. You can obtain tax breaks at various stages of your life insurance policy. However, tax benefits are as per current tax laws, and subject to change.
The meaning of ULIP is defined by their advantages. These advantages make it clear that investing in a ULIP is a smart decision.
Conclusion
Understanding the ULIP meaning and its associated benefits positions investors to make informed decisions for their financial future. As Unit Linked Insurance Plans continue to evolve, embracing the dynamic nature of the market, they stand out as a comprehensive financial solution that combines life insurance protection with wealth creation opportunities. In the realm of financial planning, ULIPs emerge not just as insurance products but as powerful tools for achieving long-term financial objectives. As you embark on your investment journey, consider the versatility and advantages that ULIPs bring to the table, making them a compelling choice for individuals seeking a holistic approach to financial well-being.
ULIP plans offered by Bharti AXA Life aims to provide life insurance cover and investment growth to the policyholder. This policy plan offers a comprehensive financial solution to provide life cover of up to 10 times the amount of the premium. It thus helps build wealth over a long period of time and enables fulfilment of aspirations and dreams of the individual and his/her family along with tax benefits. For instance, Bharti AXA Life Wealth Pro* plan provides two variants to choose from: growth variant and legacy variant. Moreover, multiple investment strategies are also offered to choose from as per the investor's suitability and needs. Other benefits included in the plan are a death benefit, maturity benefit, loyalty addition, settlement option, and others.
Disclaimer:
Life insurance coverage is available.
*IN THIS POLICY, THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
Bharti AXA Life Insurance Company is only the name of the insurance company and Bharti AXA Life Wealth Pro is the name of the Unit Linked non- participating individual Life Insurance plan, and does not in any way represent or indicate the quality of the product or its future prospects. UIN: 130L100V01
The Unit Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender or withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of the fifth year. The premium paid in Unit Linked Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Past performance of the Fund Options is not indicative of future performance.
Tax benefits are as per Income Tax Act, 1961, and are subject to amendments made thereto from time to time.
For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale.
Advt no- II-Aug-2021-3136