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LIC ULIP Plan: An Overview

Life Insurance Corporation is India's oldest and largest insurance company, with an extensive customer base. But why do the customers trust LIC? Well, there’s no shadow of a doubt regarding the range of plans; LIC of India has a list of different categories fulfilling the diverse needs of specific customers with complete transparency and flexibility. Some plans offer life cover, some provide medical benefits, and others are purely for investment. But there’s an exclusive category offering more than one benefit in a single plan, known as Unit Linked Plans. If you want to take advantage of life insurance and investment return in one plan with a long-term wealth creation purpose, you need a ULIP Plan from LIC of India to invest. When and why should you buy the LIC ULIP plan? What are the benefits and features of the LIC unit-linked plan? Which ULIP plan is best to invest in? Reading further in the article, you will get answers to all your questions. Stay with us!

What is LIC ULIP Plan?

Just like any other Unit Linked Plan, LIC ULIP Plans are designed to offer the dual benefit of life cover and investment in a single plan. The ULIPs help shield you from the uncertainty of life with the long-term aim of protecting your family's future.

The policyholder pays the premium for the cover they select. A part of the premium paid towards the LIC ULIP plan secures the insurance cover while the remaining is invested in market-linked funds that provide applicable returns with the growth.

Benefits of ULIP Plans from LIC of India

Unit Linked Plan by Life Insurance Corporation of India provides the benefits of life cover, savings, and investment that help create long-term wealth. The plan develops a sense of security for the policyholder by letting them invest in multiple market funds and earn a higher rate of return. Let’s look at the LIC ULIP benefits.

  • Death Benefit
  • Maturity Benefit
  • Market Linked Returns
  • Tax Benefits

If the policyholder dies during the policy term, a death benefit is paid to the beneficiary in a lump sum. The settlement option is provided to the policyholder to receive the death benefit in instalments.

The policyholder receives a lump sum amount equal to the Unit Fund Value on surviving the maturity date.

A part of the premium paid towards the ULIP is utilised to invest in market-linked funds as per the risk appetite of the policyholder.

A few tax deductions are allowed on the premium paid towards LIC ULIPs and the death benefit received by the nominee as per the Income Tax Act 1961.

List of Pension Products by LIC

Life Insurance Corporation of India has designed four ULIP Plans to fulfil the investment and insurance needs of the policyholder. The plans offer various benefits and options to make it the most suitable investment option.

How Does LIC ULIP Plan Work?

Wealth creation and strong life cover are the two main objectives of LIC ULIP Plans. You will commit to a lump sum payment once you decide to purchase a ULIP. Later, you will make the premium payments on the selected mode yearly, monthly, or half-yearly. During the initial years, a large amount of money is used to maintain the plan's expenses from the premium paid. Later, the premium is used to strengthen the insurance and investment for long-term life goals.

As an investor, you can buy ‘Units’ under a single strategy or diversify your investment under the fund investment options debt, equity, or balanced. Four fund options are provided to invest based on individual preferences, and switches are allowed to make at any time during the year. Dedicated units are issued on the amount invested in the preferred fund type, and the parent fund performance decides the allocation of units. The ULIPs are managed by you and the dedicated fund managers whose only agenda is to accomplish specified investment objectives. Some charges are deducted from the fund, like Fund Management Charges, Mortality charges, and other service charges.

Upon the maturity of the ULIP, the fund value is provided to the policyholder. In case of death of the assured, the death benefit is provided to the beneficiaries in the form of available Fund Value or Sum Assured, whichever is higher.

What to Consider While Purchasing a LIC ULIP Plan?

Once you understand how the ULIP plans work and learn their benefits, you may decide to purchase LIC ULIP. But before investing, you must compare the plans, evaluate the basic obligations, and choose one optimal plan. There are some points you can consider while purchasing a LIC unit linked plan

  • Evaluate Your Goals : Since the ULIPs provide you with the advantage of saving, investing and life cover in a single plan, evaluating your financial bearings, liabilities, and future objectives is crucial. This will help you create a budget for your future aspirations like child’s education or marriage, home buying, family vacation, retirement planning, etc.
  • Right Insurance Cover :Once your financial goals are crystal clear, calculate the life cover amount required to achieve them. Also, estimate the premium paying amount that is feasible for you, including the add-on riders and other options. Since the step is essential, better consider taking the help of a financial advisor. We RenewBuy, can help you with that.
  • Investment Tenure: Deciding on the investment tenure is essential as this will help you yield maximum policy benefits at the right time. Stay invested long-term, as the corporation may offer some bonuses and additions.
  • Know ULIP Charges :Life Insurance Corporation of India levies some charges if you avail of the optional benefits under the ULIP plans. You need to know the applicable charges on the additional benefits to avoid miscalculations and estimate the right amount you will receive.

Why Should You Buy a ULIP Plan from LIC?

Besides the benefits mentioned above, there are several reasons why you should consider buying a LIC Unit Linked Plan.

  • Partial Withdrawal

    After completing five policy years (lock-in period), the policyholder can partially withdraw the units if all the premiums are duly paid.

  • Flexibility

    The policyholder can choose and switch between the four fund options available: Secured Fund, Bond Fund, Growth Fund, and Balanced Fund. The initial four switches a year are free, and the policyholder must pay Rs. 100 charges for subsequent switches.

  • Enhanced Coverage

    The policy allows the enhancement of the base policy coverage by giving the option to buy LIC’s Accidental Death Benefit Rider. If you opt for the rider, a lump sum amount is paid to the nominee as an Accident Benefit Sum Assured in case of accidental death.

  • High Claim Settlement Ratio

    LIC has a claim settlement ratio of 98.74%, meaning the company settles the claim hassle-free. Hence, while investing in LIC ULIP, be stress-free about the claims and customer support.

  • E-Services

    Despite being the oldest insurance company in India, LIC keeps updating its processes with the modest technology available. LIC has also launched e-services to ease operations and increase customer satisfaction. Now, customers can compare and buy a plan online, make premium payments, update their information and reach for grievance redressal.

Final Words

Life Insurance Corporation of India launched ULIP plans to provide the dual benefit of insurance and investment in a single plan and attract customers with high returns. The premium the policyholder pays is used in multiple vertices to strengthen the life cover and invest in the market-linked securities. Which keeps the profit risk-free and develops enough wealth to help fulfil future financial needs. With the advantage of being flexible and customizable, you can move your money from one fund option to another and gain maximum profits. Also, you can withdraw some of your money in an emergency.

LIC Unit Linked Plan helps you invest your money in a disciplined manner and attain your short and long-term goals. LIC of India has a 24X7 customer support system to help policyholders with the right assistance. Want to make the LIC ULIP buying process effortless? Connect with the experts at RenewBuy.