Is ULIP a safe investment plan and tax deductible? What is the ideal amount of tenure that is required for high returns?
Investment in ULIP is eligible for tax deduction under Sec 80C of I Act. Since it is a market linked investment so there is always a market-risk factor involved while investing, it suits well to a moderate to high risk taking investors. The maturity amount and the death benefits are also exempt from tax under the Sec 10(10) D. The ideal amount depends on your risk profile, fund availability and return expectation. Ideally an investor should focus for minimum investment tenure of 5 to 10 years. Following are some important points to look at while you invest in ULIP:
- Set goal for short and long period both
- Try to maintain a balance between risk and expected return while investing
- Initiate with a small amount and then gradually increase as per your comfort
- Always check your financial plan regularly and review the investment as per requirement.
Most of us fear losses more than the joy we get from Profits, hence the risk taking capabilities are at stake, If an investor lacks the proper knowledge and risk taking capabilities then the nominal return form the Insurance products serves the purpose, It helps the individual in simplifying his financial information. Insurance is subject matter of solicitation, Please read the offer document carefully.
A ULIP or a Unit-Linked Insurance Plan is a hybrid product which provides insurance and investment to its investors. The policyholder gets financial protection with the insurance cover and at the same time, since a part of the premium paid is channelled into market-linked assets, he gets to save for his long-term goals as well. These long-term goals can be anything from buying a house to funding his children’s education. Even though ULIPs might be risky, you can choose where your money should be invested. The money is usually invested in equities and debt and the percentage is based on your risk appetite. Choose more of debt if you don’t want to take on high risks. Note that investing in equities will give you higher returns than investing in debt. Equities returns give you better returns if you stay invested for at least 5 years. Read this post for more information - https://blog.bankbazaar.com/ulip-should-you-consider-investing-or-not/.