Is it wise to invest in ULIP?

Is ULIP a good option?

Popularly known as Unit Linked Insurance Plan, ULIP offers both insurance and investment. It offers life cover with good returns, and also helps in saving taxes. In fact, as per the current market situation, ULIPs have become one of the best investment options.

Why you should not invest in ULIP?

To beat the post-tax net return from a ULIP, an equity MF would have to give a much higher net return as an equity MF investor will have to pay a 10% LTCG tax on LTCG of above Rs 1 lakh. ULIPs are not meant to give you adequate insurance cover which should ideally be taken through a good term plan.

Is ULIP better than MF?

The reason being, ULIPs promise a fixed sum whether or not the investment plan makes money. In comparison, the returns from mutual funds vary depending on the risk factor. Equity mutual funds have the potential to offer higher returns, while debt mutual funds offer slightly lower returns.

Is ULIP better than LIC?

If your purpose is insurance for life, along with investment, choose ULIP. If your purpose is protection against mishaps in the future, choose a pure insurance policy as it is risk free and premiums to be paid on it is also comparatively lower than a ULIP.

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Is ULIP good for long term investment?

ULIPs are best suited for individuals with a long term financial plan of wealth creation and insurance. Whether it is for retirement, children’s education or for other financial goals, a ULIP continued till maturity works as an advantage. It gives you the dual benefit of savings and protection, all in a single plan.

What is the benefit of ULIP?

ULIPs provide the flexibility of premium payment. You have the option to move your money between equity and debt funds. ULIPs allow you to withdraw a part of your money whenever you need it. You can also choose where to invest, depending on your risk appetite.

How safe is ULIP?

ULIP Policies Make a Secure Investment with Long-term Perspective. As ULIP plans have a lock-in period of five years, it makes sense to monitor your ULIPS over a period of five years or more, as it gains stability over a longer term. … However, there are a few charges associated with ULIP, such as: Allocation charges.

Are ULIP gains tax free?

As per section 10(10D) of the Income Tax Act, 1961, benefits received from ULIPs are tax-free.

What if I stop pay ULIP premium?

Your ULIP provider will not charge any penalty if you are unable to keep up with the premium payments. … Notice: Once you have discontinued the premium payment, you will be served a notice within 15 days after the expiry of the grace period of the policy. This serves as an option to revive the policy.

How is ULIP return calculated?

Generally, high-risk funds, comprising more equity, offer higher returns, whereas low-risk funds, comprising bonds, offer stable returns.

  1. There are two ways to calculate ULIP policy returns:
  2. Absolute Returns = [(Current NAV- Initial NAV)/Initial NAV] *100.
  3. Swati Tumar – Travel & Finance Writer.
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How is ULIP calculated?

The Net Asset Value or NAV of a ULIP plan is calculated by adding up the total ULIP funds on a date and deducting various expenses like operating and management charges from it.

Which ULIP plan is best in India?

Best ULIP Plans in India 2020

ULIP Plans Entry Age Min. Premium
PNB Metlife Smart Platinum 7 to 70 years ₹30,000
MAX Life Fast Track Growth Fund Three months – 60 years Rs. 25, 000 – Rs. 1 lakh
SBI Life Wealth Assure 8 – 60 years ₹50,000
HDFC Life Pro Growth Plus 14 to 65 years Rs 24,000 – 1,00,000

What is 80C and 10D?

Section 80C offers deductions of up to Rs. 1.5 lakh on life insurance premiums paid in a particular year. Section 10(10D) specializes in offering tax deductions on claims, i.e. death and maturity benefit, which includes all forms of accrued bonuses against the respective life insurance policies.

What is difference between ULIP and endowment plan?

ULIP or Unit Linked Insurance Plan is a financial instrument which is a combination of insurance and investment. … An endowment plan is a traditional life insurance plan which guarantees a lump sum amount/payout post the survival period or on death of the policyholder.