The investment risks in Ulips depend on policyholder’s risk appetite. Policy holders do have an option of selecting the kind of fund they wish to invest. It is advisable since the returns are directly affiliated to market performance, one need to monitor funds on regular basis and consult financial expert for any concerns.
Prior to 2010, Ulips were high charge funds with low returns, but due to the efforts of IRDAI in 2010 charges on Ulips were reduced and IRDAI ensured that the new products are bought and sold as a medium to long-term savings and protection plans. In today’s time Ulips have become one of the most convenient plans for any medium to long-term investors. These investment risks can easily be added in the category of goal-based financial solutions that offer dual benefits of investment and protection. With the help of internet Ulips can be bought in easy and cost efficient manner. While traditional ULIPs are sold actively in the markets, online ULIP policies are slowly gaining popularity amongst the people over the traditional concept. Online ULIP policies lay down easy path to participate in the market returns over medium to long term and give the necessary coverage during the term. Life insurance companies have leveraged the power of internet and have introduced online ULIPs that are easy to buy at extremely cost-efficient measures.
There are lot of benefits of buying Unit Linked policies online:
In Ulips, there are lots of charges associated to be paid such as premium allocation charges, policy administration charge, fund management, switching, mortality and policy discontinuance charges. There are online ULIPs in the market with zero charge structure except fund management charges mutual funds per annum. Such benefits make ULIPs even more comparable and lower in terms of cost than equity.
Online purchase helps investor to choose the combination of funds of their choice. They can keep a regular tab on performance by just logging into the account everyday. They can switch funds as per their risk appetite. Some insurance companies do offer free switches and premium redirection in each policy year and do charge a nominal fee to the customer if the number of switches are exceeded. Free annual switches allow the customer to shift from equity to debt and vice versa with ease and maximize returns.
They offer tax benefits under section 80C and Sec 10(10D) of Income Tax Act 1961, subject to the conditions/limits specified therein. They come under EEE taxation module, thus the premiums, paid, earnings and the maturity benefits all come under tax free earnings. Such tax benefits can increase the return on investment significantly.
The most crucial benefit of Ulip is life cover as well as the opportunity to earn market linked returns with UIip. During your race to earn money in life, if anything unfortunate happens to you, a minimum lump sum benefit is payable to the nominee of the life assured.
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