Are ULIPs the Best Tax-saving Investment Options?

Are ULIPs the Best Tax-saving Investment Options?^~

Demonetization has not only affected the spending habits of people but has also affected their investments. Banks have lowered the interest rates on FD (fixed deposits) and we expect that the rates will go down further. Looking at the current market situation, Life insurance has become one of the most preferred options for those who are seeking the best tax-saving option to invest their money.

ULIP Plans

Plan starting from ₹1,000/month

Save upto ₹46,800 in Tax under section 80C^{^}

Zero LTCG Tax^¶

In built life cover

Strategic Planning

For a period of a minimum of five years, the policyholder is not allowed to make any withdrawal. This period is called the lock-in period under ULIP. Even if partial withdrawals are allowed, they cannot surpass 20% of the fund value, as assured at the time of taking the policy. Above all, these withdrawals are completely tax-free, if carried out after completing the lock-in period.

This feature helps the policyholder to use ULIP as a tool of investment to fulfill their financial goals. If you want to make a lot of money for buying a house in the near future or for the higher education or marriage of your kids, you should start investing in a ULIP as soon as possible. It will not only help you grow money but will also keep your loved ones protected against the financial uncertainties of life.

Tax-exemptions on Premiums

The money invested in Unit Linked Insurance Plans is invested further in debt, equity, or money market instruments. Depending on certain conditions, the policyholders enjoy the benefit of the tax deduction on the premiums paid. This rule is stated under Section 80C of the Income Tax Act. The current limit for tax deduction is up to Rs. 1.5 lakh, which means that the premium paid for your ULIP will be deducted from your taxable income.

Top-up your Investments

ULIPs offer periodic top-ups that allow the policyholders to invest their excess cash. If the premium paid for these top-ups does not exceed 10% of the assured sum, then the policyholder can also leverage tax benefits under section 80C and also exemptions under section 10 D.

Above all, these exemptions do not hamper your financial planning, as these top-up investments generate additional returns to handle your tax liabilities.

The Final Verdict

Those who want high returns, tax exemptions, and assured life cover simultaneously must invest in ULIPs. People often invest in mutual funds besides purchasing a life insurance plan. However, balancing multiple investments can prove to be a difficult task. Therefore, you need to search for a product that offers comprehensive benefits. In that sense, ULIP is the best instrument that helps you enjoy multiple benefits like insurance, savings, investments, and tax-saving. They provide you with a high return, decent financial life cover, and tax exemptions. Above all, the risk associated with ULIP varies from high to low. So, ULIP is indeed the best tax-saving tool for investment.