ULIP – A house full of living benefits beyond protection
We are all aware that financial security of our families is one of our foremost financial requirements. We are now in the era of new-age unit linked insurance plans (ULIP) which not only provide financial protection to your family in your absence but also provide a host of living benefits.
Living benefit plans are insurance policies that provide financial benefits while the policy holder is still alive and helps them meet their important life goals such as child’s higher education, worry free retirement, travel around the globe, purchase dream home etc. It works best with time. If one plans and invests early in a well-organised manner, he/she will have fewer worries about finances not just post retirement but also during the working years.
Let us find out how one can avail living benefits by investing in ULIP insurance plan.
Firstly, thanks to the power of compounding due to which investment in equities for a long term allows money to grow far higher than inflation ensuring ample future savings.
It is not merely enough for investments to grow well. They need to be protected from the excessive impact of tax. The rewarding aspect of ULIPs is that they help you on both counts.
ULIPs are eligible for tax deductions. Under Section 80C, ULIPs entitle you with annual tax deduction of up to Rs 1.5 lakh. This is provided that the life insurance coverage is at least 10 times the premium amount. The maturity proceeds are also exempted from tax under Section 10(10) D.
Widens risk protection net
There are substantial threats to your family’s financial security from risks such as critical illness and disability. In such cases, not only do you dip into your savings to meet the immediate and follow-up treatment costs, but your ability to earn a regular income may suffer. The good news is that you can cover these risks with the help of riders that are attached to your ULIP policy.
The riders provide lump sum payouts during emergencies such as onset of critical illness, provided certain conditions are met. Thus, in one master stroke you create a wide financial security net for your family so that the growth of money to meet various life goals is not impacted by these emergencies.
Rewards for staying invested
The policy term of ULIPs is long, stretching for 10-30 years. As a result, policy holder is rewarded for staying invested for periods of 10 years and beyond, with loyalty bonus. After the first payment, you get further payments for regular intervals of say, 5 years. Loyalty bonus is a percentage of life insurance amount provided by the ULIP. This effectively means that you end up saving more for your life goals.
Indian life insurance companies have been innovative with ULIPs. For instance, Bajaj Allianz Life Insurance recently launched its new-age ULIP, Bajaj Allianz Life Goal Assure, which introduced two new features that are game changers.
The Return of Life Cover Charges feature of Bajaj Allianz Life Goal Assure Plan, guarantees that a policyholder will get back the cost of the life cover when the policy matures, thus enhancing the value of their corpus on maturity.
Also at maturity, the customer who opts to receive the maturity benefit in instalments (and not lump-sum) over a period of five years will receive the benefit of Return Enhancer which is an addition of 0.5% of each due instalment. During this period, the customer’s fund value will continue to participate in the fund(s) of his/her choice.
The other key features of Bajaj Allianz Life Goal Assure plan are Fund Booster and Loyalty Addition for paying premium regularly and staying invested. It is applicable for annualized premium of INR 5 lakh or more, and for policy terms of 10 years and above. There are also options to decrease Sum Assured, change Premium Payment Term, and unlimited free switches between funds for customers without any tax liability. To further enhance the value packed benefits, customers can also avail tax benefits under section 80C and 10(10D).
Bajaj Allianz Life Goal Assure also provides four portfolio strategies that are designed keeping in mind the different customers’ needs and risk appetite. The portfolio strategies are Investor Selectable Portfolio Strategy, Wheel of Life Portfolio Strategy, Trigger Based Portfolio Strategy and Auto Transfer Portfolio Strategy which are managed by experienced fund managers.
Undoubtedly, with its combined benefits of wealth protection, value appreciation, strategic flexibility, and tax savings, Bajaj Allianz Life Goal Assure Plan is a house full of living benefits.