Life Insurance

How to Use ULIPs to Build Wealth in a few Years

You may go to Google and get numerous information on how to double your investment in five years, but little do you know about these fraudulent practices that would rather empty your pockets. Nothing…

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You may go to Google and get numerous information on how to double your investment in five years, but little do you know about these fraudulent practices that would rather empty your pockets. Nothing can guarantee that your investment will grow largely within five years. However, investing in ULIPs can help you build wealth within five years and also help you secure your money. The 5-year minimum lock-in period ensures investor discipline while generating good, market-linked returns. The main benefit of the best ULIP plan is that they provide life insurance while investing a portion of the premium paid in debt, equity, or balanced funds.

What is a ULIP Plan?

A ULIP plan is a life insurance company that combines insurance coverage and investment exposure in a single financial product. When you purchase a ULIP policy, you must pay regular premiums. A portion of your premium payments is used for insurance. At the same time, the remainder is pooled with the assets of other policyholders and invested in equity and debt instruments of your choosing.

If you want to buy the best ULIP plan, you can go online and compare ULIP plans by using the ULIP plan calculator. This ULIP calculator will provide details that will help you clear your doubts.

Short-term Benefits of ULIP Plans

We all know the long-term benefits of ULIP plans. However, you should also know a few things that make it a good short-term investment option.

  • Flexibility: ULIPs consider changing financial commitments, giving policyholders more control over their funds. You have the freedom to switch between funds as per your needs. If you feel like a certain investment is not reaping the benefits, you can opt for a different one.
  • Security: The ULIP concept is such that it provides the dual benefit of wealth creation as well as life insurance. If the policyholder passes away while the policy is still active, the nominees will receive a death benefit. This ensures that your family and loved ones are cared for even if you are absent.
  • Tax Benefits: ULIP policy is an excellent tax-saving plan. Sections 80C and 10(10D) of the Indian Income Tax Act, 1961 exempt the premiums and the ULIP plan returns as well.

Long-term Benefits of ULIP Plans

When it comes to the long-term, you get various options for investment. ULIPs, on the other hand, offer good benefits as well. Let us take a look at them:

  • The benefit of Compounding: Long-term investments are required to receive its benefits. This is because overall returns in the later years of investment increase exponentially as returns build up and equal the principal amount. Therefore, look no further and begin your search for the best ULIP to buy in India if you are looking for an investment option that will assist you in building wealth over the long term.
  • Top-Ups: You might want to increase your investment as your needs and stage in life change. One benefit of a ULIP is the ability to make additional investments above and beyond your regular contributions to the plan.
  • Market-Linked Investment: ULIP investors have a wide range of equity and debt funds, depending on their risk tolerance and expected returns. Since equity funds are known to produce sizable returns over the long term, those looking to build a sizable corpus should only invest in them through ULIPs.

Conclusion

With many of us looking for options to build wealth less volatilely, ULIPs are the way to go. Now that you understand how ULIPs operate, you can choose this investment option with greater knowledge. An extended investment period is advantageous, and market volatility's effects are long-term compensated for. With time, more significant portions of your premiums are invested, allowing you to accomplish your long-term objectives.

Related Article: Best Life Insurance Policy in India