ULIP or Unit-linked Insurance Plans is a fusion of life cover and investment plans. They are flexible, affordable, convenient, and all things sensible. But did you know that the latest trends in this form of an investment plan have only amplified its potential this year?
Today, a ULIP plan can offer more than just affordable premiums or the opportunity to tailor your financial goals to your risk appetite. Let us take a dive into it to know more.
What Is A ULIP Plan?
For those who don’t already know, let us quickly run you through the basics.
A ULIP plan, as we mentioned above, provides the dual benefit of both an investment plan and a life cover. This implies that it allows you to make sufficient savings while simultaneously investing for your family’s financial protection when you are not around. This may be in the case of your untimely demise, which is very uncertain and requires your family to receive protection in the form of compensation.
A ULIP plan generally provides a lot of flexibility which comes through the varied investment options available. These may hail from balanced funds, equity funds, to debt funds. You get to choose from amidst them as per your risk tolerance and the financial objectives you have set forth for yourself to achieve. This way, you also get to mitigate your risks as per your preference and create a completely tailored approach for yourself.
Since ULIP plans also provide the benefits of two different plans under the same umbrella, it also makes for a very affordable choice. To add to it, the premiums you pay for the same are also quite nominal.
What Are The Latest Trends In ULIP 2023?
1. Capital Gain Tax
In the Budget of 2018, a long-term Capital Gain Tax was created. This was conducted on both equity funds and stocks. This implies that any profit that steps from ULIP policy after this budget which was issued on February 21, 2021, is taxable as a capital gain. However, this is only for policyholders whose premiums are more than Rs. 2.50 Lakhs.
The capital gains that escalate above Rs. 1 Lakh may be taxable at @10%. On the contrary, short-term capital gain tax is taxed at a stagnant rate of 15%. But this is only when the short-term capital gain tax is on a higher premium, and the ULIP is equity-oriented.
But make sure that each premium that you have paid for each of these plans is within the bracket of Rs. 2.5 lakhs each year. This is also tax-free.
2. Return Of Mortality Charge
Earlier, one of the most challenging tasks was to solve the problem of stopping the life cover amount from getting subtracted from the earnings of the investment plan. Thankfully, this problem has been finally addressed by the insurers who deliver mortality cost refunds.
Any type of expense that gets deducted from your life cover by the insurer is regarded as a mortality charge. Now, many insurers add the entire sum back into your account that may get subtracted at the time of the policy term. This happens during the maturity period.
3. Elimination Of Charges
Many investors were also earlier against the concept of investing in ULIP as they had to pay an innumerable amount of charges relating to the investment. But now, there has been an elimination of these unnecessary charges that render you peace of mind. These are:
- Policy admin charges
- Premium allocation charges
- Switching charges (These are the charges associated with switching between the varied fund options made available to policyholders. They do this to gain better returns.)
- Revival charges
- Medical examination charges
- Partial withdrawal charges
- Fund management charges
- Miscellaneous charges
- Surrender charges
Time and again, ULIPs tries to give its policyholders a peaceful experience through utmost flexibility and convenience. These latest trends are also conducive to the same, which is why now is the best time to choose ULIP plans in need.
If you think that you are looking for the best of both worlds that come in the form of life cover and investment plans, ULIPs are a wise choice for you. You can also conduct your relevant research further upon the same. But we are sure you will come to choose ULIPs for what it has to offer.