Make A Difference To Your Investment Portfolio With ULIPs

Varun was a young IT professional with an avid passion for cooking. And yes, we’re not talking about boiling water or making Maggi! Instead, the guy had some serious skill for gourmet-style cooking. Needless to say, his Chinese-inspired biryani or Hyderabadi-French omelette was the talks of the office.

Whenever his colleagues questioned him about his secret, he would promptly say, “It’s all in the ingredients. Get the balance right and you will never wrong on the flavours!”

Just like Varun’s recipes, his investment portfolio too had a balanced mix of traditional and bolder options. Thus, he started by investing a portion of his savings into traditional, low-risk avenues such as bank FDs and endowment life insurance plans.

As his confidence and income grew, he decided to spice up matters with other riskier investment options such as mutual funds and ULIPs among others, after comparing their estimated returns through a ULIP return Calculator.

Diversifying Your Investments is Crucial

You cannot have a recipe with balanced flavours with only sugar or only salt. Instead, you need to combine the sweet and salty flavours with other bolder profiles. Similarly, you cannot maximise your savings with a portfolio that is dominated by only a single asset class.

What you instead need, is a well-balanced investment mix, which comprises an assortment of asset classes. You need to allocate your investments between equity, debt and traditional options, according to your risk appetite, life goals and time horizon.

For example, if you are looking at investment options for long-term, equities offer the best possible returns. On the other hand, if you are looking for opportunities less-riskier that equity investments, you can consider Unit-Linked Investment Plans or ULIPs.

How Can ULIPs Help Make A Difference to Your Portfolio?

Those of you, who’ve tried the classic fish ‘n’ chips would know what an absolute delight the combination is. The recipe marries the unique flavours of succulent batter-covered fish and crispy-fried potato chips to knock a flavourful concoction.

Just like fish ‘n’ chips, ULIPs too combine the highly coveted growth return profile of traditional market-linked products and life insurance. As a result, ULIPs deliver a business proposition that attracts both aggressive and risk-averse investors alike.

  • Combining Insurance with Investment

Unlike any other investment option, ULIPs offer a unique combination of high investment returns and life insurance, all under a single plan. A portion of the premium invested under ULIPS is allocated to equities and debt funds, while the remaining amount is used to provide the insurance cover.

As a rule of thumb, investors need to remain invested in ULIPs for an extended period, to avail decent returns besides the life cover benefits.

  • Personalised Investment Options as Per Risk Appetite

Popular ULIPs from reputable insurers such as Future Generali allow you to create an individualised portfolio of equities and debt funds. The choice of investments is based on your ability to take risks.

In other words, you can make an informed choice while deciding between the fund options and choose the percentage of investment you would like to invest in them.

ULIPs comprise a variety of high-risk equity funds, funds with a moderate risk profile and debt funds that deliver fixed rates of returns. Therefore, these plans are relatively better placed at hedging the returns against the volatility of the stock market.

  • Seamless Switching Options

Most insurers allow ULIP investors to switch between investment instruments on the foresight of expected returns and market trends. While these plans will enable you to estimate the returns with the help of a ULIP return calculator before the purchase, they also offer comprehensive insights into the performance of the inherent funds and their net asset value (NAV) periodically.

Therefore, you can easily anticipate the profits and losses during the investment period and make informed decisions to optimise the value of your investments through fund switching under ULIPS.

  • Tax Benefits

Saving on income tax is a crucial aspect of ULIPs. Therefore, the amount of premium invested is eligible for tax rebates, up to Rs. 1.5 lakhs, under Section 80C of the Income Tax Act 1961.

On the other hand, the payout received from the ULIP plans does not incur any tax liability under Section 10(10D) of the Act. That said, investing in ULIPS is more than mere tax benefits or insurance; it is a viable avenue that offers a comprehensive scope of support for your loved ones.

See Your Money Grow, Start Investing!

Saving money in bank accounts or retirement deposits isn’t enough to ensure quick growth of your savings or adequate protection against the growing taxation rates. It is here that ULIPs can help fortify your portfolio through its distinctive approach towards investment and insurance.

ULIP plans fit the bill perfectly when it comes to combining growth with security. Therefore, you must incorporate these plans into your investment profile to build a respectable corpus for your family’s dreams and life goals.

 

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