ULIPs to build wealth
Unit-linked Insurance Plans (ULIPs) are great financial instruments for those who of you wanting to build wealth while simultaneously receiving the protection of a life insurance policy. You have the freedom to use these plans to finance any long-term financial objectives, like purchasing a home or paying for your children’s school or college. A ULIP plan is an all-around financial choice as it provides financial protection along with creating wealth.
Types of wealth creation ULIPs
- One pay – regular pay plans:
Depending on your requirements and capacity to pay a premium, you can select either one-time or ongoing payment plans. A one-pay plan requires you to pay the premium just once during the duration of the policy. While the regular payment plan allows you to make comfortable periodic premium payments throughout the policy’s duration.
- Guarantee – non-guarantee plans:
Some ULIPs for wealth generation also provide assured advantages. The ULIP Benefits arise from the fact that they are life insurance + investment products that allow you to reap longer-term benefits with less market risk. These plans are appropriate if you want to save money. Guaranteed returns are an ideal option for investors who are risk averse.
Non-guarantee plans, on the other hand, already include a variety of fund possibilities. You can invest your money using the funds of your choice. You can increase your exposure to equity funds and increase your chances of experiencing higher long-term growth. If building wealth is your objective, these options are perfect for you.
3.Life Stage-based and non-life stage-based plans:
ULIP plans based on life stages are derived from the fact that your priorities change as you mature. As a result, they split your savings across equities and debt funds. Your age determines the initial allocation. The plan progressively shifts your funds from equity to debt to preserve your wealth as you age. Your asset allocation is always aligned with your age and evolving financial requirements.
ULIPs to safeguard the future of your children
Ensuring your kids receive the education they need is one of your critical duties as a parent. Being a parent, you want to provide the best for your kids, ensuring that they get everything and that nothing bad happens to ruin their future.
You can benefit from many types of ULIPs to assist you in safeguarding your children’s future. ULIPs also provide the following advantages in addition to the ones already mentioned:
- You can take a portion of your wealth after investing for at least five years. You can use this money to pay for your kids’ significant educational milestones.
- ULIPs offer a predetermined lump sum amount in the tragic event of the policyholder’s passing, which might assist your family in covering any immediate needs while they take time to come to terms with their reality.
- The life insurance provider will also cover your future premiums, allowing your money to keep growing. Your child (if they are above 18 years old) or the appointee will receive a lump after the policy term ends. This sum will assist your youngster in realising their goals. If your children are under the age of 18, an appointee is a person who receives the life insurance payout on their behalf.
ULIPs for planning your retirement:
Your working years come to an end when you retire, marking the beginning of your golden years. You should take advantage of your freedom from obligations and follow your forgotten interests at this time. To make this ambition a reality, you must start early retirement planning and consider purchasing the appropriate ULIP. The following are some justifications for beginning your retirement preparation immediately:
- Longer retirement years: As India’s average life expectancy rises, it is more crucial than ever to plan for a longer retirement. In India, a 60-year-old’s life expectancy is 18.2* years on average. According to this, the typical Indian lives 78.2 years. It would be beneficial if you started making plans to support your lifestyle and unplanned expenses of your retirement years.
* (MOSPI) Ministry of Statistics and Programme Implementation report ‘Situation analysis of the elderly in India’: Abridged Table 3.9– Age 60 and Period 2014- 2018
- Unexpected medical bills are a frequent concern as people get older. Such medical expenses can be challenging to manage unless you make a plan for them in advance. A ULIP here ensures that you have funds to rely on for such unplanned expenses.
- Financial independence: After retirement, you want to have enough money to live your life as you choose. This demonstrates how crucial it is to make financial preparations for retirement and secure your freedom. With a ULIP you get to build wealth that helps in creating a retirement corpus.