Saturday, July 04, 2020


Retirement Planning: ULIPS Can Be Your Safety Net

November 26, 2019 11:59 AM

Planning your finances, especially for your retirement years, is crucial to have a life of fulfilment after your work years are behind you. With a holistic retirement planning approach; therefore, you can easily envision your life in your 60s and onwards, steadily working towards ensuring that money is the last of your worries in later stages of life. Another reason why you need to plan for your retirement is thatyou will have financial independence to make choices such as how to spend time after retirement, where to live, and when to altogether quit working. 

Overall, retirement planning is likely to evolve throughout different life stages. While early in your professional career, you may want to set aside some savings for your retirement, you may go on to include specific investments or income targets during your 30s and 40s.

You may also look into ULIP pension plansoffered by reputable insurers such as Max Life Insurance, which offer multiple benefits to help streamline and maximize your savings in due time. These ULIP policyallow you to manage your investments flexibly and once you reach retirement, you may proceed to utilising the benefits of these plans. Here’s how you can build a significantly large retirement corpus with the help of ULIP plans.

What is ULIP?

ULIP policy or Unit Linked Insurance plans are mostly a life insurance product that offers both investment and life insurance cover benefits under a single policy structure. In ULIPs, a portion of your invested premium is allocated into a common pool of money, also known as fund options, which in turn, gets invested in various equity and debt instruments. The remaining portion is assigned towards your providing life insurance coverage to you. The returns on your ULIP investments vary according to the performance of the fund and the investment tenure chosen by you.

Benefits of Investing in a ULIP Policy

1. Freedom to Choose Fund Investment Options

ULIPs offer a myriad of fund options, which are primarily equity, debt or a mix of both instruments. In other words, you can choose to invest in low, medium and high-risk investment options – all under the same ULIP policy. You can not only select the fund option as per your investment goals and risk tolerance but can also change the percentage of equity and debt investments in your portfolio, whenever desired.

2. Flexible Goal Planning

You have the flexibility to choose either the amount that you are willing to every month (the premium payable) or the corpus value you want to create (this includes both investments and life cover). Thus, you can personalize your ULIP to suit your premium payment capability, specific life goals such as retirement and other financial needs. Moreover, you also have the flexibility to increase your investment with add-ons throughout the policy payment term.

3. Tax Benefits

When it comes to investing in ULIP policy investments, you can also maximize your tax savings throughout the investment period. Thus, you can leverage different sections under the Income Tax Act, 1961, to your benefit. Moreover, you can avail comprehensive tax savings at various stages of your ULIP policy investment, including:

  • Entry Benefit – You can avail tax savings on the premium payments towards the ULIP policy, up to Rs 1.5 lakh under the Section80C
  • Switching Benefit– You are eligible to make completely tax-free switches between debt and equity funds
  • Exit Benefit – The maturity proceeds from the ULIP policy are tax-exempt under the conditions of Section 10(10D)

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