A well-planned retirement corpus ensures financial security during retirement years. One of the options offering financial security in India is Unit-linked Insurance Plans. Alongside being an option that lets you build a substantial retirement corpus in a structured way, these plans also offer life insurance. They allow you to build security for your family while taking risks for your future.
Let’s look at what these plans are and how they can help you create a retirement corpus for secure superannuation.
What is ULIP?
A ULIP is a financial product combining the dual benefits of life insurance and investment. As with a life insurance plan, you are required to select a sum assured and pay premiums based on various factors.
Unlike the usual life insurance plans without a market-linked aspect, ULIPs offer an investment component. This allows you to look forward to maturity benefits without compromising on the life cover. A ULIP calculator can help you estimate the premium amount for your selected sum assured, while you can look at factors such as fund performance history, fund options, and more, to get a better idea of maturity benefits.
How ULIP Builds a Retirement Corpus
How can buying a ULIP help you with securing a corpus for your retirement? ULIPs are usually considered to give better results in the long run, which makes them suitable for long-term financial goals such as retirement.
Here is how ULIPs can fit into your retirement plan.
· Market-linked Returns
ULIP investments are linked to market performance. By selecting equity funds for long-term growth, or balanced funds for a mix of risk and safety, investors can potentially achieve higher returns, helping them build a more substantial retirement corpus.
· Flexibility in Investment Options
Policyholders can switch between equity, debt, or balanced funds as per their changing risk profile. There may be a limited number of free switches available during the year, so planning them carefully can help with optimising returns based on your goals.
· Tax Benefits**
Investments in ULIPs qualify for deductions under Section 80C of the Income Tax Act, 1961. The maturity proceeds are also tax-free under Section 10(10D), provided certain conditions are met, making ULIP an attractive option for retirement savings.
· Long-Term Growth
ULIPs are designed for long-term investments, usually aligning with the goal of retirement planning. Equity-linked ULIPs, tend to offer better returns over a long period due to the compounding effect and the higher potential of equity markets.
· Life Cover
It is one of the most important aspects of ULIPs. In case of the policyholder’s death during the term, their family can receive a death benefit from life insurance, ensuring financial protection while building a retirement corpus.
Using a ULIP calculator, you can understand how you fit these plans into your financial plan today and your retirement plan for the future. Building a retirement corpus requires careful planning and disciplined investments. With ULIPs, you can adopt an organised approach and rest assured about a more secure tomorrow.
Tax exemptions are as per applicable tax laws from time to time.
Disclaimers:
Unit Linked Insurance Products are different from the traditional insurance products and are subject to risk factors. The Premium paid in unit-linked life insurance policies are subject to investment risks associated with capital markets and NAVs of the units may go up or down, based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Please know the associated risks and the applicable charges from your Insurance Agent or the Intermediary or policy document issued by the Insurance Company.
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IRDAI is not involved in activities like selling insurance policies, announcing bonus or Investment of premiums. Public receiving such phone calls are requested to lodge a police complaint.
