When you plan to start a family, one of the major and daunting concerns is about finances. Starting a new family requires a lot of thinking and assessing your current condition so that you can plan for your future efficiently.
Financial planning experts define this transition in two-stages; first when you get married, and the second one when you plan to have kids. In both these stages, financial security is at the epitome of the requirement list.
But the big question now arises how you can be ready for these stages financially?
The answer to this question is to visualise that you are at the start of a long-term process of building financial independence and security net. Financial security is a blend of savings, insurance protection and investments, which accumulate over time. And amongst the many options of wealth creating instruments present in the market, ULIPs provide all these benefits together in a plan.
As an NRI you too can benefit from investing in ULIPs back in India.
What is a ULIP?
ULIP or Unit Linked Insurance Plans are a combination of insurance and investment. In these plans, the policyholder can pay a premium monthly or annually. Some amount of the premium paid goes to secure life insurance and the remaining part is invested into various funds. The policyholder can invest throughout the term of the policy – 5, 10, 15 years or more and accumulate the units. ULIPs offer investors options to invest in equity and debt. An aggressive investor can pick equity-oriented fund option whereas a conservative one can go with debt option.
How ULIPs Help in Achieving Your Life Goals?
- It Provides a Comprehensive Protection: ULIPs provide life cover to its fullest. Being the policyholder, you can increase your cover by adding various riders to meet a particular protection needs. The life cover benefit paid is according to your chosen sum assured, thus, protecting your family from financial strain in your absence.
- Life-Cycle Based Investment Options: It provides you complete freedom to select an investment strategy based on your preference. So, if you think you can take care of your investment profile without any professional help, you can use the independent approach to have access to funds. On the other hand, if you want professional help to handle and grow your assets, you can select a lifecycle-based investment option. Here, the premium amount is invested in equity funds in the early years and then reallocated to debt fund as the policy nears maturity.
- Top-Ups: You can also make additional investments in your ULIP plan through top-ups. It is an added investment over and above the regular premium you commit yourself to pay throughout the policy term. This investment helps you in getting closer to your #Lifegoals. Moreover, it also increases your protection quotient at the same time.
- Lower Charges: The Fund Management Charges begin as low as 0.90% and can go up to 1.35%. Leading insurers like Max Life Insurance levy 0.90% as fund management charges (Subject to certain conditions).
- Multiple Benefits: You can even transfer your previous investments from one fund to another. ULIPs offer you the option to change the fund in which your future premiums will get invested. It even helps in meeting your emergency fund requirements by allowing you to withdraw money from a ULIP policy once the lock-in period is over.
- Tax Benefits with ULIPs: Money invested in ULIP policy can be claimed as a deduction under section 80C. A maximum of Rs 1,50,000 is allowed under this section.
Under section 10(10D), the amount received on partial withdrawal or maturity is exempt from tax. (For policies purchased before 1st April 2012, the premium to the sum assured should not exceed 20% for the proceeds to be tax-free)
With all the anticipation and happiness that comes with starting a family, financial responsibilities and challenges also come together. ULIPs are instruments that can help you in handling these financial challenges in a better manner. So, hurry up and purchase a policy from the top ULIP plans available and fulfill your dreams of starting a family.
The views expressed by the author in this article are personal and do not reflect those of Connected to India.