In India, the urban working population strives throughout their life to save money for accomplishing their life goals. Life goals can be typically classified into short-term goals and long-term goals. While short-term goals include purchasing a new house or a car, the long-term goals can be a huge responsibility like retirement. According to research conducted by IPSOS, 33% of Indians regularly save money for a smooth retirement, while the rest of the Indian population keep aside a specific proportion of their income for the later life.
Whether you aspire to meet your short-term goals or long-term goals, purchasing a Unit Linked Insurance Plan (ULIP) is an excellent solution, especially for longer ones. Before understanding why a ULIP plan is the best for long-term wealth creation, let’s first understand what a ULIP is:
What is a ULIP plan?
A ULIP plan is a dual-benefit financial product. It is an amalgamation of investment and insurance under a single integrated plan. A ULIP plan is typically suited for a long-term investment since it has a lock-in period of five years. When you invest in a ULIP policy for a long duration, the chances of the growth of funds is high. In simple terms, the longer the lock-in period, the higher the generation of wealth over the due course of the ULIP policy.
Before buying a ULIP policy to achieve your life goals, let’s take a look at why it is the best long-term wealth creation plan to achieve your life goals:
- It offers a diversified financial portfolio
A ULIP investment caters to short-term, medium-term as well as long-term goals. Since a ULIP plan has a diversified portfolio, liquidity would never become the problem to realize your goals at every different stage of life. In addition to this, you can always receive protection from the market volatility with a ULIP investment. Therefore, see to it that you put your money in the different assets like equity fund and debt funds based on your risk appetite. That way, you can control any loss while being invested for a long period.
- It has a zero mortality charge
You can purchase a ULIP policy either online or offline. When you buy a ULIP policy online, there is a chance that it might not levy a mortality charge. Online ULIPs have zero mortality charge since it is completely returned by the end of your ULIP policy tenure. Under an online ULIP policy, the protection element is costless.
- It provides flexibility
Apart from its cost-effectiveness, a ULIP policy is also a flexible option of investment. When you invest in a ULIP policy, you can select from equity or debt fund but also switch between these two types of ULIP funds. With the switching option, you can distribute your invested money across multiple portfolios as well as secure it from market volatility.
As highlighted above, a ULIP plan not only creates a safety net for your investments but also allows long term creation of wealth. Many Indians might opt for a ULIP policy because of its long term potential. Before you buy a ULIP policy for yourself, you should evaluate your long term life goals carefully and choose the best ULIP plan in Indiaexplicitly based on them.