Why Should Women Invest in ULIPs?

What are ULIPs?
 

ULIPs are life insurance plans which combine life insurance with investment subject to market risk that help you earn market-linked returns on your premiums. The premiums paid towards the policy are directed to specific funds that you choose. The funds, on the other hand, invest in market-linked securities like equity, debt, etc.

Depending on how the securities perform, the fund value rises or falls. In the case of premature demise during the policy term, the ULIP offers a death benefit to your family. If the plan matures, the available fund value is paid.

ULIPs have many benefits which make them suitable for women investors. Let’s understand what they are.
 

Benefits of ULIPs for women
 

Here are some reasons that make ULIP investments for women a good fit –
 

● Insurance protection
 

ULIPs are life insurance plans. As such, besides allowing you to create savings for your goals, ULIPs also offer life insurance protection. Women can be financially secure against the risk of premature demise, especially if they are the primary breadwinners of their families. In the case of their demise during the term, the ULIP will pay a death benefit that can help their families tackle the financial loss suffered.
 

● Suitable for all strategies
 

ULIPs offer a range of fund options for investing your premium. If you have a high-risk appetite, you can invest in equity funds and gain from their  return potential. On the other hand, if your risk appetite is low, you can choose debt funds for stable returns.

With the variety of fund choices, ULIPs prove suitable for all types of women investors with varying risk appetites. Moreover, some ULIPs also offer readymade investment strategies that allocate your premium in a predetermined manner. Women who are new to investments or who need assistance in managing their portfolios can use these strategies for hassle-free investments.
 

● Planning for financial goals
 

ULIPs come in different varieties. Child ULIPs are available to help you plan for your child’s secured financial future. On the other hand, if you want to plan for your retirement, you can choose pension plans There are endowment ULIPs, too, that help you save for different financial goals.

Thus, ULIPs prove to be a suitable option for creating a corpus for your goals.
 

● Control over your investment
 

ULIPs allow you to manage your investment as per your needs. You can choose –

• The premium that you pay
• The fund into which the premium will be allocated
• The term for which you want the plan
• Optional riders, etc.

These choices give you complete financial freedom to invest on your own terms.
 

● Flexibility
 

ULIPs offer  flexibility, too. Here’s how –

• If you need liquidity during the policy tenure, you can make partial withdrawals post the lock in period, subject to policy terms and conditions and get immediate financial assistance in times of emergencies.
• If your investment strategy changes and you want to change the funds, you can switch, that too without incurring any tax liability²
• If you want to invest more, many ULIPs allow the top-up facility
• If you want to change the funds for future premium allocations, you can choose the premium redirection facility. It should be opted before the due date of the next premium and it might be subject to addition of Miscellaneous charges ..
• You can also choose to avail  the maturity benefit or death proceeds  in instalments through the Settlement Option feature subject to policy terms and conditions.
   

● Tax benefits
 

Let’s not forget the attractive tax benefits that ULIPs offer that allow women to plan their taxes better. Here’s how you can save tax with ULIPs

• Premiums paid towards the plan qualify as a deduction under Section 80C (in case of old tax regime) up to ₹1.5 lakhs¹. The premium should be up to 10% of the sum assured (for policies issued on or after 1^st April 2012) or up to 20% of the sum assured (for policies issued on or before 31^st March 2012) to enjoy the deduction¹. If you suffer from any disability or disease as specified under Section 80DDB or Section 80U (in case of old tax regime), the premium should be up to 15% of the sum assured (for policies issued on or after 1^st April 2013) to qualify for deduction¹.
• The death benefit received from the policy is tax-free³
• The maturity benefit received is also tax-free under Section 10(10D). However, you should remember the following rules –
  • If the policy has been issued before 1^st February 2021, the maturity benefit is tax-free under Section 10(10D)⁴ subject to satisfaction of conditions mentioned therein
  • If the policy has been issued on or after 1^st February 2021, the maturity benefit is tax-free only for premiums aggregating upto ₹2.5 lakhs⁴ subject to satisfaction of conditions mentioned therein. If the premiums are higher, the returns would be taxed. The tax implication will be as follows –
    • Gains from units of high value ULIPs (whether equity/ debt oriented), would be taxed as Capital Gains at the rate of 12.5%. Policyholders shall be eligible for an exemption of its capital gains from high value ULIPs upto an amount of Rs 1.25 lakh as per Section 112A of the Act, subject to the satisfaction of conditions therein.

Effective financial planning with ULIPs
 

ULIPs can serve as an attractive financial planning tool for women. You can enjoy financial security, market-linked investment returns, flexibility of managing your investments, and tax benefits with ULIPs. Assess the different types of ULIPs available and choose a plan that aligns with your financial goals. Buy the plan and take a positive step in your financial journey.

FAQs
 

1. Do women enjoy preferential benefits under ULIPs?
 

ULIPs offer similar benefits for women and men. However, the mortality charges for women might be lower since women enjoy a lower mortality rate⁵. This can result in reduced charges and a better return potential.

2. Can women claim higher tax benefits than men with ULIPs?
 

The tax slabs and deductions are the same for women and men. As such, women cannot claim higher tax benefits than men.

3. Can women buy ULIPs in India?
 

Yes, women can buy ULIPs in India as insurance companies do not discriminate based on the insured’s gender.