Securing your family’s future with yours is vital in the financial world today. With such diversification in the marketplace, a definite investment option like ULIP and life insurance can keep the left hand of pure saving strong in gaiety while still incurring protection during your earnings period to ensure a risk-free future.
Understanding Life Insurance
Life insurance is specifically tailored to provide the death benefit to those who depend on you once you are gone. In simple words, life insurance is a contract between the policyholder and the life insurance firm, whereby the latter commits to a monetary payment for the benefit of the dependents if the former passes away.
Types of Life Insurance
Term Life Insurance: This is a form of life insurance where the coverage stands for a defined term, such as 10, 20, or 30 years. If the policyholder dies within this term, the death benefit is paid to the beneficiary.
Whole Life Insurance: This type of life insurance, its name justifies the term whole life insurance provides coverage for your lifetime. This insurance usually involves a savings feature in which the policy can earn cash over time.
Endowment Plans: These plans will combine savings with a life assurance element. Besides the benefit for death, endowment plans also provide an at-maturity benefit paid out as a sum on the expiry of the policy term.
ULIP: Under ULIP, investors receive life coverage along with investments. It offers two folds of benefits; one is the security of funds, and the other is wealth generation. The premium amount is split towards buying a life insurance cover.
Understanding ULIPs
A Unit Linked Insurance Plan, also known as ULIP in shorthand, is an investment product that offers twin benefits, such as life insurance coverage as well as the investment growth aspect. ULIPs offer a designed means to save for the future and ensure the financial security of your family in case of an untimely early death.
Key Features of ULIP
Fund Option: ULIPs offer flexibility in choosing funds that would be invested. Depending upon the risk appetite, one can opt for equity funds, which are riskier but more rewarding.
Fund Switching: The most typical example of ULIPs is fund switching where the switch between funds may be possible as a result of market performance or changes in financial needs of the policyholders.
Lock-in Period: ULIPs carry a five-year lock-in period as mandatory. That way, you would be forcing long-term financial discipline upon your head.
Wealth Creation: ULIPs are a long-term value-generating product. Compounding is such that it ensures many many-fold increases in the investment over time.
Partial Withdrawals: While the lock-in period applies, partial withdrawals are permitted under ULIPs. With this aspect, one can always maintain liquidity in case of emergencies.
Tax Benefits: The ULIP premiums come within the ambit of being tax deductions u/s 80C of the Income Tax Act, 1961 to the extent of ₹1.5 lakh.
Advantages of ULIP as a Life Insurance Choice
Dual Purpose: ULIP as a product gives double benefits. It provides, generally, the usual life insurance product with just the death benefit, while the ULIP offers growth opportunities along with a death cover.
Long-term financial planning: ULIPs can be ideal for people with long-term financial goals. Be it saving for your child’s education sipping down for retirement, or even building wealth.
Flexibility: ULIPs offer the flexibility of more choices in investing compared to traditional life insurance. You could choose how much of the premium goes into equity and how much goes into debt.
Managing Your ULIP and Life Insurance with the HDFC Life Insurance App
Manage all your life insurance and ULIPs in a very user-friendly manner using the HDFC Life Insurance App. Track your investment, settle premiums or switch funds through the entire process to enable ease of management for policyholders, keeping in line with their financial goals.
Key Features of HDFC Life Insurance App:
Convenience in Policy Purchase: It would enable you to compare and buy life insurance and ULIP policies through the application process online. You could even opt for a simple life cover or an investment-linked policy.
Fund Performance Monitoring Facility: It shows real-time updates about how your ULIP investments are performing. You can monitor the fund performance of equity, debt or a balanced one.
Fund Switching: ULIPs can turn out to be one of the highly beneficial features of a scheme, switching between funds. The HDFC Life Insurance App makes this process very easy.
Premium Payment Management: The application makes premium payments quite easy to handle. With multiple options under this, the application offers reminders and an auto-debit facility.
Top-Up Investments: The ULIP investment can be increased with top-ups if one wants to invest more for better returns. If there are extra funds that need to be invested at a better return, the application allows making top-ups.
Claims Help: The application will provide you with step-by-step guidance in case of a claim. This would ensure that the process for your claim will go on without a hitch.
How to Choose the Right ULIP or Life Insurance Policy
Evaluate Your Financial Needs: Is it a corpus for the education of a child? Are you building a retirement corpus? From there, based on your long-term requirement, identify how much coverage and investment are required.
Evaluate Your Risk Tolerance: ULIPs come with multiple fund options to represent high-risk equity funds to low-risk debt funds. Evaluate your risk tolerance and accordingly choose the mix of funds which best suits your financial objective.
Flexibility Check: Ensure the ULIP you choose to invest through has the flexibility to top up and lets you switch funds. This will keep you in a position to change your investment strategy as circumstances change.
Understanding Charges: Many charges go with the ULIPs. For example, there are premium allocation, fund management, and policy administration fees. Understand all these charges and know how each would impact your returns.
Conclusion
ULIP is also unique because it encompasses an insurance product which combines life insurance and growing investments. It provides the facility to invest in market-linked assets along with the security of your family’s financial future through life cover. The HDFC Life Insurance App makes it easier to manage ULIP and other life insurance policies through one easy-to-use platform that lets you track, invest in, and manage your policies with ease.
