ULIP RETURNS IN 10 YEARS

ULIP RETURNS IN 10 YEARS- HOW GOOD AS AN INVESTMENT OPTION?

Unit Linked Insurance Plan (ULIP) is a mix of insurance along with investment. ULIP Returns in 10 years are increased.The main motive of this plan is to provide wealth creation along with life cover. In this plan, the insurance company invests a portion in life insurance and remaining portion into a fund that is based on debt or equity and matches with your long term goals. These goals could be children’s education, retirement planning or another important event you may wish to save for.

How Does ULIP Work?

The insurance company invests a portion of the premium in bonds/shares etc. and the remaining amount is utilized in providing an insurance cover. Fund managers manage investment in insurance companies. ULIPS allow you to switch your knowledge of the market’s performance as well as your portfolio between equity and debt based on your risk appetite. This is a huge factor in the popularity that investor can switch easily.

Lock-In-Period Of ULIP

Lock in the period increased from 3 years to 5 years by the Development Authority of India (IRDAI) and the Insurance Regulatory in the year 2010 as regards ULIPs. Insurance is a long term product so the policy can range from 10 to 15 years.

Must Read: ULIP VS MUTUAL FUNDS – PROS & CONS

Why You Should Invest In ULIPs & ULIP Returns in 10 years.

Income Tax Benefits: ULIP is eligible for a tax deduction under Section 80C. Apart from this, the returns in this policy on maturity are excluded from income tax under Section 10(10D) of the Income-tax Act. Therefore this is a double benefit that you can claim with this policy.

Life Cover: ULIP gives you a life cover with investment. It offers security to the family of the taxpayer in case of emergencies like the death of taxpayer etc.

Finance Long Term Goals: If you have long term goals like buying a new car, a house, marriage etc. then it is a good investment option for you. Money gets compound effect in this plan. So the returns are better. In ULIP plan the policy always goes for a longer time to reap the best out of it.

The Flexibility Of A Portfolio Switch: ULIPS allow you to switch your knowledge of the market’s performance as well as your portfolio between equity and debt based on your risk appetite. Apart from this insurance companies offer very few numbers of switches free of cost.

ULIP Returns in 10 years Vs Mutual Funds returns

ParticularsULIPsMutual Funds
NatureInvestment cum insurance productPure Investment product
WithdrawalOnly after 5years lock-in-periodCan be withdrawn anytime
SwitchingHere, Switching between funds is permitted and not subject to taxation.Switching between schemes of the same fund house is permitted. However, it’s treated as redemption and the resulting capital gains are taxable.
ChargesPremium allocation charge, mortality charges, fund management charge and administration chargesNo entry load, the annual fund management charges apply and an exit load, if applicable.

Must Read: HDFC ULIP PLANS CHECKPOINTS FEATURES BENEFITS

Best ULIP Returns in 10 years Plan To Invest In 2019

ULIP PlansEntry AgeMinimum PremiumPremium Allocation ChargesPolicy Admin ChargeNo. Of Free Switches In A Year
Bajaj Allianz Future Gain1 to 60 yearsRs 25,0000% to 1.5%Rs 33.33 per monthUnlimited
PNB Metlife Smart Platinum7 to 70 yearsRs 30,000 to Rs 60,0001.25% p.a
Rs 40
4
Max Life Fast Track Growth Fund18 to 50 yearsRs 25,000 to Rs 1 lakh2%(in Single Premium) to 4% (for Annual premium)
Rs 1,500 per year
12
Sbi Life Wealth Assure8 to 65 yearsRs 50,0003% of Single PremiumRs 45 per month2
Hdfc Life Pro Growth Plus14 to 65 yearsRs 2,500 to Rs 10,0002.5% of the Annual premiumRs 500 per monthunlimited

Types Of ULIPs

These are divided on the following parameters

  1. Funds that ULIPs invest in

Balanced funds: Where the premium is paid balanced between the equity and debt to low the risk for investors.

Equity funds:  Premium is invested in the equity market.

Debt funds: Premium is invested in debt instruments that carry lower risk and also offer a lower return.

Must Read: INSURANCE TYPES – DIFFERENCES YOU MUST KNOW

  1. The end use of funds

  • Child education
  • Retirement planning
  • Wealth creation
  1. The death benefit to Policy Holders

Type I ULIP: This pays the fund value to the nominee or higher of the assured sum value in case of death of the policyholder.

Type II ULIP: This pays the fund value and the assured sum value to the nominee in case of the death of the policyholder.

Types Of Fees And Charges

Premium allocation charge

It is deducted as a fixed percentage from the premium in the starting years of the policy. It includes the renewal and initial expenses and intermediary commission expenses.

Fund Management Charges

It is the fee charged the insurance company for the management of the various funds in the ULIP. The charge on non-equity funds is much lower and insurers levy the maximum amount allowed in equity funds.

Mortality Charges

It is for the insurance coverage under the plan. Mortality charges depend on a number of factors like the sum assured, age etc and are deducted on a monthly basis.

Policy administration charges

It is deducted on a monthly basis and charged for the administration of the policy. ULIP Returns in 10 years are increased and it is a good choice because it offers benefits of insurance with investment.

Must Read: INCOME TAX DEDUCTION 2019-20 DO NOT MISS ANY POINT

Switching your funds

The moving of investments between options is called switching. There are certain limits per year in which you have options to switch your funds. Some changes may charge of Rs. 100 – Rs. 250 per switch.

Things To Consider As An Investor

  • Personal financial goals
  • Compare ULIP offerings
  • Risk factor
  • Investment horizon

ULIPs offer an advantage in terms of being customizable and flexible. ULIPs provide the option to move your money between debt and equity funds, the flexibility of premium payment, and allow you to withdraw a part of your money whenever you need it. ULIP returns in 10 years can be obtained on your risk appetite you can also choose where to invest. ULIPs are investment instruments that combine the benefits of both investments and life insurance in money markets.

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