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Tips & Tricks to Maximize Your ULIP Investment Gains

ULIP, also known as a Unit-Linked Insurance Plan, is a dynamic tool that covers two of your essential financial needs. Firstly, it offers you insurance, and secondly, it helps you prepare for your varied financial goals. ULIPs offer a variety of investment options ranging from equity and debt to hybrid funds. They help you cater to your evolving financial needs with a combination of investment choices, policy terms, and features. However, in order to benefit from a ULIP and maximise your market returns, you must keep in mind some factors. 

Let’s find out what these are:

  • Invest for the long term:

ULIP insurance has a lock-in period of five years. Most people make the grave mistake of withdrawing their money soon after. However, ULIPs can offer the best growth when invested in for the long term. This helps you maximise your returns and avoid caving into short-term preventable expenditure. Moreover, when invested for the long run, your investments compound better, and you can ride out market volatility thus generating relatively higher returns. 

  • Switch from one fund to another when the time is right:

ULIP investment options include equity, debt, and hybrid funds. Each of these can appeal to different risk appetites and goals. Equity can be best suited for high-risk investors looking for long-term gains. Debt can be ideal for short-term goals and investors with a low-risk appetite. Lastly, hybrid funds can offer a balance between equity and debt with moderate risk and returns.

If you want to earn high market returns, you must make the most of the switching option and shuffle depending on your goals and the market situation. For instance, equity can be a good choice when the market falls. However, when the market is on the rise, you may benefit from debt funds. Studying the market and making timely decisions can boost your fund’s value and help you earn more. 

  • Use the pre-set option:

If you are not an experienced investor or are unable to time the market yourself due to a hectic schedule, you can opt for the pre-set fund allocation option. Under this option, your funds are allocated in different asset classes as per your life stage. Typically, there is an emphasis on equity when you are young. This is slowly switched in favour of debt as you grow old. This can be a great way to earn optimal returns without actively monitoring your fund. 

  • Use tax savings to your benefit:

Remember that ULIPs are primarily insurance plans and they offer financial protection to your loved ones in your absence. This is why they qualify for tax savings under the Income Tax Act, 1961. You can claim a tax deduction of up to Rs. 1.5 lakh in a financial year on the premium paid towards ULIP insurance (subject to conditions under section 80C)Additionally, the benefit received by your nominee is also tax-exempt subject to conditions mentioned under Section 10 (10D). Claiming these tax-saving provisions can help you further maximise your ULIP returns and save money.

  • Be consistent with your investments:

While a ULIP plan is highly liquid with options like partial withdrawals, it can benefit you more if you let your money grow untouched. Along with investing for the long term, you must also be consistent with your investments and focus on financial discipline. This gives your money the time and opportunity to earn a higher yield. 

  • Pick a good insurer:

ULIP investment is a major part of your financial plan. It can significantly impact your future financial security. Therefore, try to compare different plans and select an insurer with a good track record and unwavering performance. 

To sum it up,

ULIP plan can help you achieve several financial goals, both long-term and short-term. Thus it makes sense to try and incorporate these tips throughout your investment. This can give your fund a good boost and help you achieve your goals sooner. 

If you are looking to invest in a ULIP plan, you can consider our plan Reliance Nippon Life Classic Plan II (A Unit-Linked, Non-Participating, Individual Life Insurance Plan, UIN: 121L085V04) that offers a host of benefits including:

  • Choice of 7 investment funds across equity, balanced and debt, based on your risk appetite
  • 52 free switches to actively manage your investments
  • Life cover throughout the policy term with additional protection against accidental death
  • Tax benefits on premiums paid u/s 80C and benefits received, as per prevailing tax laws

To seek a detailed understanding of ULIPs, please click here and enter your details.

Our expert financial advisor will get in touch with you soon after.


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