Life Insurance is one of the best investments to make to ensure that you provide a financial backup in case of a loss of life or to get a good return on investment in case you survive the insured period. Another good way to beat inflation is to invest regularly so that you earn as the markets rise. The best way to ensure that you have both the things in hand - a life insurance and a good investment in the market, go for a good Unit Linked Insurance Plan (ULIP). It not only covers your life risk but also invests your savings in good shares at regular intervals. The best feature of such a policy is that it ensures that you money is invested without you having to bother about it. In a ULIP the amounts earned are received by the insured at the end of the term of maturity. In an event of death of the insured the amounts earned shall be paid to the beneficiary.
In India most ULIPs are life insurance plans where the cash value of the policy varies. This variation is due to the fact that the cash value is the net asset value of the investments made. Such a plan not only gives protection but also gives flexibility in investment. This investment feature of a ULIP earns it the brownie points as it is not available with any other insurance policies.
Most ULIPs allow loading of other benefits and riders to its original base plan. In case a client goes for an accidental permanent and total disability benefit plan, in such an event the sum is paid to the assured in installments. Similarly if a critical illness rider is taken, in an event of diagnose of such an illness the sum is payable on completion of certain conditions.
Most of the companies allow a free look for a period within which you can cancel the policy. Such a cancellation does not attract any penalty. However the dues related to the cover already given and any such related expenses will be deducted.
Another common feature for all ULIPs is the suicide exclusion. According to this no claims would be settled in case the insured commits suicide. The mental health of the client at the time of suicide cannot be taken into consideration to waiver this clause.
ULIP investors have a choice of paying a lump sum amount or a periodic payment of premiums. Another important feature that gives ULIPs an edge over other investments is the tax benefit. ULIPs are qualified for deductions under Section 80C of the Income Tax Act.
For someone who wishes to save and have a secured future, ULIP is one of the best instruments available. It not only induces to save regularly it also gets you into a habit of investing small amount regularly. Moreover it gives you coverage for life as well as builds your wealth as time passes. One of the best known investments for the small investors it allows you to invest without getting into the intricacies of the share markets.
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