Why are ULIPs good monthly investment option?

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Do you know, you can enjoy numerous benefits by choosing ULIPs or Unit-Linked Insurance Plans as your monthly investment option? Let’s know how:

1.Power of compounding: As said by Albert Einstein, “Power of compounding is the 8th wonder of the world”. Since the returns from your investment directly depend on the tenure of your investment, it is necessary to start investing as soon as possible. Mr. Shriram Nair understood the importance of the power of compounding and was able to earn more by investing for a longer duration than Mr. K.M. Srinivasan.

Parameters Mr. Shriram Nair Mr. K.M. Srinivasan
Amount to be invested 20,000 (annually) 25,000 (annually)
Invested For 20 years 10 years
Rate of returns 8% 8%
Amount to be received Rs 9.88 lakhs Rs 8.44 lakhs

 2. Rupee Cost Averaging= As the payment is made monthly, it is easy to average out the market’s ups and downs. By investing a fixed amount every month, you can purchase more units when prices are low and fewer units when the price is high. A rupee cost averaging evens out market volatility and helps you get better returns on your investment over a period of time. Without ‘timing’ your entry into the market, you can earn more returns.

3. Disciplined saving= Undoubtedly, discipline forms a crucial part of the investment. Many times, people enter the market with great enthusiasm which they fail to keep in the long run. As ULIPs are a monthly investment option, they are easy to maintain and lead to systematic and disciplined savings. Since the monthly investments are done automatically and you don’t require to interfere, you can continue saving for a long time. Being invested for a long period will fetch you higher returns!

4. Extra benefits in the form of wealth boosters and loyalty additions= Taking the above benefit forward, when you invest regularly for a longer duration, you get extra benefits in the form of wealth boosters and loyalty additions which allow you to grow your money without any additional investment.

5. Convenience= You can send a one-time instruction to your bank to activate auto-debit facility and facilitate easy premium payment from your bank account, credit/debit card. In this way, you can make an investment without worrying about missing the due date. Further, you can buy ULIPs online from the comfort of your home in a few clicks of your mouse.

6. Diversified fund options= In most of the investment options, you can either choose to invest in equity, debt or balanced funds, however, with ULIPs, you get a chance to invest in all the fundS You get to decide how much of your investment should go into equity, debt, and balanced funds as per the market conditions and your requirements. Even if you invest in one fund, you can switch your money between different funds and capitalise on opportunities. Most of the insurance companies allow some free switches in a year.

7. Withdrawal facility= Though, one should stay invested for a longer duration, ULIPs come with a withdrawal facility which allows you to make partial withdrawals once the lock-in period is over.

8. Life cover= Along with the above benefits, ULIPs offer a life cover. In the case of death of the policyholder, the nominee gets life cover and current fund value as a lump-sum payout. You can also add personal accident rider to your plan and enjoy coverage in case of disability. Also, if you die in an accident, your family will get double the sum assured. So, in this way, ULIPs offer you twin benefits—life insurance cover + wealth creation

9. Tax planning= ULIPs as a monthly investment option make it easy to accomplish your tax saving targets. All you need to do is invest monthly in a ULIP plan and get tax benefits under Section 80C and 10(10D) of the Income Tax Act.

Investing in a ULIP is the easiest way to enjoy the triple benefits- high returns, life cover and tax benefits, so start investing NOW!