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Can New Investors Choose ULIP as an Investment Option?

Jul 04, 2018 | 2 years ago | Read Time: 3 minutes | By iKnowledge Team

If you have just started your career, investments should be part of your financial plan. Financial planning is important at any and every stage of life. The sooner you start, the more you earn.

Investment usually starts with inquiring your family and friends for diverse investment options. Suggestions vary from investments in stocks, purchase of mutual funds, or savings through life insurance and health insurance. Options for creating a recurring deposit of a PPF fund are also recommended.

Since health and safety is a priority, one of the first options would be to buy a life insurance. One of the best ways you can guarantee life cover and enjoy the benefits of investment is to buy a Unit Linked Insurance Plan or ULIP.

A Unit-Linked Insurance Plan (ULIP) is a tool with which you can invest your premium periodically in equities and debt market to achieve systematic and timely gains.

One of the biggest advantages of ULIP investment is the feature of life insurance with the benefit of the long-term investment. The premium that you pay gets divided into 2 categories. One-part funds the life coverage while the second part is invested in stocks, equities and bonds. This means that along with life insurance cover, you have a perfect opportunity to keep aside a sum for investments.

As a result, ULIPs help you get acquainted with instruments of investment and generating a corpus over a period. You can use these returns to achieve your goals and financial milestones as you gain greater insight into investments in the future.

As a beginner in the arena of investments, several options form a part of your financial planning. This often leads to a state of confusion and you might mull over your decisions. It is one of the characteristics of a new investor to weigh in options and reconsider your choices from time to time.

If ULIP investment is a part of your portfolio, you can skip the above step of confusion. It is time you forget your troubles and look ahead towards a fruitful journey of financial planning and investment.

This is because ULIP is a plan that provides life cover as well as investment opportunities. It guarantees life insurance and profits made on prudent investments over a period. If your primary goal is to build a corpus and eliminate financial troubles, then ULIP is a great plan to begin with.

With ULIPs, the element of risk is negated as the investments yield returns over a number of years. This protects you from market volatility as your investments compound over a long-time spectrum. Since you are at the beginning of your financial journey, there is enough room to undertake calculated risks. Also, at early stages, you have a greater capacity to take a risk with fewer responsibilities and repercussions.

Another advantage of a ULIP investment plan is the feature of tax exemption.

If you invest in ULIPs, the premiums you pay will be exempted from taxation, under Section 80 C, and the returns on investment become tax-free under Section 10 (10D) of the Income Tax Act, 1961.

ULIPs provide investors with measures to protect their investments from the effects of market volatility. If investors suspect the onset of market volatility, at any given moment, they can switch between equities and debt funds. Once the market stabilizes, investors can analyse their financial position and switch to equities. The profits gained by such an action is exempted from taxation.

A trade-off of ULIPs is the long duration of investment required to gain profits. Investments in ULIPs generate gains ideally over a period of 10 years or more. This strategy works if you, as an investor, have plans to use profits for purposes of your children’s education, purchasing property or expenses for weddings.

Since ULIPs offers the benefit of insurance and investment, choose Aegon Life’s iInvest insurance plan. This investment plan is well-suited for first-timers and seasoned investors alike. At AgeonLife, we provide a comprehensive pre-defined strategy with the best-suited portfolios. The iInvest Plan strikes a perfect balance between wealth creation and life cover. These are the two most important aspects of financial planning for new investors. So, invest with us and lead a worry-free prosperous life.

Advt. no.: IA/Jun 2018/4121

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