In today's time, everyone is trying to make money from money. There are many investment options in the market, which claim to double the money in a short time or give better returns. But, there is also a lot of risk in these schemes. If you are looking for an investment option in which the risk is low, the return is also better, and insurance benefits are also available, then a Unit Linked Insurance Plan (ULIP) is best for you.

ULIP is such a life insurance product, in which the customer gets the double benefit of wealth creation and life insurance protection. On the one hand, it provides term plan life cover. On the other hand, you are also given a chance to double the money by investing. Not only this, you also get tax exemption on the returns received from ULIP.

Let's understand who should get a ULIP? What are the benefits of this? What are the disadvantages of ULIP? What things should you take special care of while choosing a ULIP plan:-

Who should take the ULIP plan?

ULIPs are ideal for those customers who want to keep less money for the long term. Short-term market fluctuations give low returns. Most investments benefit you in the long run.

How is ULIP beneficial for you?

ULIP gives better returns than schemes like fixed deposit, NSC, and post office deposit.

For the premium of ULIP, a maximum tax exemption of Rs 1.5 lakh is available in a financial year under section 80C.

In ULIP, if the policyholder dies due to any reason during the policy period, then the nominee is given a lump sum amount of insurance. This amount is tax-free.

In the ULIP plan, you can also make a partial withdrawal in case of emergency. Provided the amount is not more than 20% of the total value of the policy fund.

You also get the benefit of flexibility in ULIP. If the investor wants, he can increase his investment by taking a top-up in ULIP from time to time.

ULIP is a disciplined investment, as it helps you achieve important financial goals.

Disadvantages of ULIP

Investing in ULIP usually costs a lot. ULIP charges are high in the beginning, as they cover the cost of managing your funds and administering the policy. In such a situation, a large part of your premium is lost in paying the first charges.

A unit-linked insurance policy gives you less income in the initial years. When you do not take risks and prefer a safe game, you often miss out on potential profit opportunities in the market.

For beginner investors, a single ULIP can be difficult to understand, as it works as both a life insurance policy and an investment.

You cannot withdraw your money from ULIP before the lock-in period of 5 years. If you close your ULIP within 5 years, you still have to wait for the lock-in period to end to get your money.

Keep these things in mind.

To get maximum benefit from your ULIP, you have to keep an eye on the net asset value of your fund.

You also have to decide where to take your funds and how much to invest.

If the capital market performs well, your fund can earn higher returns. Therefore, it is important to understand the market.

Since returns in ULIP take time to come. In the beginning, your earnings from it are less. In such a situation, you should balance your potential earnings appropriately against the fees spent.

Disclaimer: This content has been sourced and edited from Hr Breaking. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.