The prime motto of life insurance policies is the security of the policyholder and his family. As the needs of an individual change, his insurance requirement increases. The life insurance sector has developed due to the rise in the demands for policies. Today, an investor is spoilt for choice with multiple options of life insurance policies. These plans are largely categorized into two parts: Unit Linked Insurance Plans (ULIP) and Traditional life insurance plans.
While a traditional life insurance plan provide the sum assured and a guaranteed or a vested bonus at maturity, a new-age ULIP Policy will provide you with market-linked returns. Both these plans have their benefits. It is essential to research on them before opting for any one of them. Moreover, an individual must consider his financial needs and security while buying insurance. In the meantime, go through the advantages of ULIPs and Traditional life
Benefits of a ULIP Policy:
1. A ULIP provides you the benefits of life insurance and investment under a single plan.
2. It may help you accomplish your life goals with ease provided you stay invested for a long duration
3. ULIP insurance plan lets you invest in multiple fund options like equity funds and debt funds as per your needs
4. Some ULIP plans also offers you features like loyalty additions i.e. additional value on staying invested in the plan as well as fund boosters to ensure enhanced returns on long-term investments
5. You can avail tax-savings benefits under Section 80C and Section 10(10D) of the Income Tax Act. You can claim the premium up to Rs 1.5 lakh as deduction from your taxable income as per the terms and conditions mentioned under the product. Tax benefits are subject to change in tax laws
6. It secures your family even in your absence as the respective nominee can obtain the death benefits.
Benefits of Traditional life insurance plans:
1. In traditional participating policies, the insurance company provides sum assured as well as bonuses to the policy holders in line with policy terms and conditions. They also provide guaranteed (sum assured payable on maturity or death of policyholder) and non-guaranteed benefits (includes bonuses whenever applicable)
2. Non-participating policies on the other hand does not provide any bonuses to the policyholders however the benefits are fixed at the time of issuance of the policy. You are entitled to guaranteed benefits only under a non-participating policy.
There is no debate as such between ULIPs and traditional life insurance plans. An investment in either of the two products could be fruitful. The trick to picking the right policy is by analysing what your specific needs and requirements are. This becomes important because your lifestyle, responsibilities and life goals would be very different from someone else. It is a good idea to take professional help while choosing the policy you buy. An expert will guide you through the selection process and lessen your burden. In the end, an ideal plan is one which is beneficial to you and fulfils your requirements in the long run.