Unit-Linked Insurance Plans (ULIPs) have gained immense popularity as a versatile financial product, offering both insurance and investment opportunities. While many are familiar with the basic features of ULIPs, there are several lesser-known aspects that make them a highly flexible and strategic choice for investors. From innovative tax benefits to the ability to align with changing financial goals, ULIPs have much more to offer than meets the eye. Whether you are exploring ULIP benefits for the first time or seeking advanced insights, this article uncovers five fascinating facts that can help you maximise the potential of your ULIP investments.

• ULIPs allow flexible premium payment options.
• Investments in ULIPs qualify for tax benefits under Sections 80C and 10(10D).
• ULIPs are effective tools for long-term retirement planning.
• They combine life insurance with market-linked investment opportunities.
• ULIP fund portability enables better returns and dynamic financial planning.

One of the lesser-known ULIP benefits is the flexibility it offers in premium payments. ULIPs allow policyholders to choose between regular premiums, single premiums, or limited premium payment options based on their financial capacity. This flexibility ensures that individuals can manage their investments without disrupting their financial stability. Additionally, policyholders can adjust premium allocations between debt, equity, or balanced funds to match their risk tolerance and financial objectives, offering a truly customisable investment experience.

Read more: ULIPs for every life stage

ULIP plans not only provide tax deductions under Section 80C of the Income Tax Act but also offer added tax advantages under Section 10(10D). Investments up to Rs. 1.5 lakh annually in ULIPs qualify for deductions, while the maturity proceeds are tax-exempt, provided specific conditions are met. This dual advantage ensures that both the invested amount and returns can be optimised to reduce your tax liability. Additionally, ULIPs often have no tax on switching funds, further enhancing their appeal as a tax-efficient investment option.

ULIPs are not merely short-term investment instruments; they are powerful tools for long-term financial planning, particularly for retirement. By systematically investing in ULIPs over time, individuals can build a significant corpus for their retirement years. The flexibility to choose between various fund options, along with the tax benefits and life insurance coverage, makes ULIPs an ideal choice for securing a financially stable retirement. Unlike traditional retirement plans, ULIPs also provide the added benefit of market-linked returns, which can lead to higher growth over time.

A standout feature of ULIPs is their ability to combine life insurance protection with market-linked investment opportunities. This dual benefit ensures that your loved ones remain financially secure in the event of an unfortunate incident while your investments grow over time. With a ULIP, policyholders can simultaneously address wealth creation and financial protection, making it a holistic financial product. Additionally, the flexibility to switch funds allows investors to maximise returns based on market performance.

Few are aware that ULIPs offer the option of fund portability, allowing policyholders to switch their investments between different funds offered by the same insurer. This feature ensures that individuals can adapt to changing market conditions or personal financial goals without incurring additional charges. ULIP portability is particularly beneficial for those seeking higher returns, as it empowers them to optimise their investment strategy dynamically.

ULIPs are a dynamic financial product offering a unique combination of flexibility, tax advantages, and dual benefits of insurance and investment. Beyond the standard features, these lesser-known aspects of ULIPs demonstrate their potential as a comprehensive financial tool. Whether for retirement planning or optimising returns, ULIPs cater to diverse financial needs.