New age ULIPs are smart investment options for Millennials

Oct 02, 2018 | 1 year ago | Read Time: 3 minutes | By iKnowledge Team

Unit-linked insurance plans or ULIPs are being recognized as one of the best investment options in recent times, especially for the young millennial audience.

ULIPs are smart investment options for Millennials - Aegon Life

What makes New Age ULIPs such a smart investment option for millennials in the current volatile market?

“For starters, it is exempted from Long Time Capital Gains Tax (LTCG Tax). ULIPs are like, gateways to the world of equity, man. ULIPs have this unique product stand that’s like, a combination of mutual funds investment and life insurance, you know. You could like, have a metaphorical heart-attack from the suddenness of market volatility and be rest assured that the ULIP plan will be covering your metaphorical funeral too! ULIPs have a 5-year lock in period and it helps us inculcate the habit of saving, so that’s definitely a plus”, says an 18-year-old intern in India’s top telecommunication company.

Such ideas and thoughts are common amongst today’s millennial generation. ULIPs have been reworked in recent times to make them feasible and are the perfect combination of market investment and life insurance at reasonable rates, making them a preferred investment product for working millennials. Whether you look at it from their tax saving perspective or having the option of choosing from different funds, the benefits of ULIPs are worth the time and money invested.

  1. Mortality Charge Payoff

Due to its hybrid structure that offers both life insurance cover as well as investment options under a single plan, ULIPs are products that have a premium. Which is inclusive of a mortality charge covering life insurance. However, since insurance companies have reworked their outlook towards ULIPs, insurers like Aegon Life offering a return on mortality charge on the maturity of their plan such as with their iMaximize insurance plan. You will now receive the mortality charge back once the plan matures, and in a way get yourself a free life insurance cover.

  1. Choose Between Funds

ULIPs allow you to switch between funds and maximize the value of your returns based on your requirements. You can choose between pure debt, pure equity and balanced funds to invest in. If your funds start to incur losses, then you can switch between funds to save yourself from incurring further loss. Most ULIPs let you choose between 4 to 8 funds, based on your risk appetite.

  1. Tax Benefits

The strongest highlight of investing in ULIPs is its tax saving abilities. You get tax benefits for ULIPs both, at the time of investment and at the time of maturity. The investments made in ULIPs are deductible from your taxable income under section 80C (for up to Rs 1.5 lakhs) and your returns from ULIP investments are also exempted from tax as per Section 10(10D).

  1. Available Online

ULIPs are available online as zero cost ULIPs because there is no distribution cost or commission other than fund management charges (FMC) and mortality charge as per the guidelines. Moreover, just like Aegon Life, most companies are reversing mortality charges.. So if you are internet savvy as are most millennials, then do your research on ULIPs available online by visiting various websites for the same.

  1. Choose Payout Type

Aegon Life’s iMaximize allows you to choose between 2 payout options. Option 1 assures a lump sum amount which is the higher of sum assured or fund value or 105% of premiums paid. On the other hand, Option 2 provides triple benefits in three stages. Your nominee will receive higher of sum assured or 105% of premiums paid. With this option, you also receive an added saving benefit with Aegon Life covering all future premiums. And lastly, every year, your nominee will receive an income equal to the annual premium of the plan.

ULIPs are cost-efficient and easy to purchase. With their low risk and high return giving characteristics and easy switch options, ULIPs are an attractive solution to millennials who have just started to consider investing and do not want to risk volatility of the market. They offer mental comfort to these young investors who are looking to enter the world of equity to meet their financial goals and pay for their avocado chipotle and an Uber.

II/Sep 2018/4434


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